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

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CHAPTER 15

Understanding the Cost Dynamics of Capacity

When doing research, consulting, and just talking to people about capacity and costing, one thing that becomes clear is, there is a general lack of understanding of the interactions between allocated capacity costs and cash flow by the accounting community and those who use accounting tools. Much of this belief stems from the notion that to many of them, costs are costs, and they are all the same; there is no difference between costC and costNC. Also, they believe both are generally cash numbers. Of course, we know this is not true. However, their need to create costNC by costing work, products, and activities so they understand the so-called financial implications of products, services, ...

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