The long version:
The FMC generates optimum and maximum altitude data to assist the flight crew in choosing the best cruise altitude for a given trip. The calculated maximum altitude is used to ensure that the predicted path of the airplane remains within its performance capabilities. This maximum altitude is the lower of the thrust-limited altitude and the limits of the VNAV operational envelope.
The computation of optimum altitude includes an estimate of the climb fuel burn between the current altitude and optimum altitude, unless the airplane is above the optimum altitude. If the current altitude is above the optimum altitude, the computations are performed at the current gross weight.
The thrust- limited altitude is shown for temperatures of ISA, ISA + 10o
C, ISA + 15o C, ISA + 20o C, and has been computed assuming maximum cruise thrust and a residual R/C margin of 100 FPM.
These thrust rating and residual R/C margins are the standard FMC defaults used to calculate the thrust-limited altitude during the climb flight phase.
Both assume standard day temperature conditions. The thrust-limited altitudes determined may be corrected for other temperature conditions and residual rate of climb values.