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

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CHAPTER 17

Getting Managerial Information from Capacity

As mentioned previously, my guess is that you’re probably thinking this; “I get what you’re telling me, Reginald, but I still need my accounting data. If I don’t have it, how will I replace it?” I’d like to propose that the answer is: Replace it with data from modeling and managing capacity.

Capacity modeling is somewhat of a unifying concept between finance, accounting, and operations. Let me explain. Finance and accounting seek to understand, explain and manage the financial state and performance of your company. In the context of understanding the financial state of your company, cash flow should be pretty easy to model. Most of what you buy and use to do work is capacity. How much and ...

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