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Lies, Damned Lies, and Cost Accounting by Reginald Tomas Lee

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CHAPTER 14

Understanding the Basics of Capacity Dynamics

When you look at your organization from capacity perspective, you begin to see common activities differently and more clearly. This chapter will explain the basic concepts of capacity dynamics and how they affect, or are affected by, everyday activities and your company.

As I suggested in Chapter 12, you buy input capacity in finite amounts. This finite amount will be represented throughout the rest of this book by a rectangle as seen in Exhibit 14.1.

images

Exhibit 14.1 The rectangle will represent input capacity. It represents what you buy and what you now have access to. It is both a financial ...

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