Absolute efficiency, 118
Accounting, 31
concessions, 14
data in foresight, 72–76
data in hindsight, 71–72
versus effciency, 25
Accounting Matrix, 5
Accrual accounting rules, 27
Activity-based costing, 15, 37, 101
Average cost per unit, 115
Balance sheet, 8
Black belts, 19
Business, operates, 8
Buying capacity, transaction types, 44
cost dynamics of, 65–69
dynamics, understanding basics of
effectiveness of, 59–60
efficiency of, 58–59
productivity of, 60
efficiency, 75
managerial information from, 77
intersection between operations and accounting, 85–86
modeling, 78–80
models operations more effectively, 80–84
modeling, 77
Capacity units (CU), 99
based change, 114
based financial value, 101
benefit, 111
and decision-making, 35–36
arbitrary relationships, 40–41
forced relationships, 36
losing track of relationships, 36–37
meaningless numbers, 37–39
no single cost, 39–40
no ties to cash flow, 41
focusing using capacity, 97–98
revenue, 101
Cash flow, 7, 14, 25, 29, 43, 56, 57, 61, 68, 69, 111
versus costNC, 39
managing, 9
statement of, 8
Cash flow cost (costC), 19–21
Certified public accounting (CPA), 16
Constraint-based scheduling, 117
Contribution margins, 94–95
scope of analysis, 96–97
Cost, 100
approaches, 35–36
allocation technique, 63
determination of, 48
dynamics of capacity
conclusion, 69
less purposeful, 66–69
purposeful allocation techniques, 65–66
efficiency, 11–12
as effort, 19
of goods, 95
management, 110–111
savings, 12
CostC, 24, 54, 57, 59, 61, 62, 67, 69, 73, 75, 76, 78, 80–85, 93, 96, 109–110
Costing
primary focus of, 54
CostNC, 24–25, 27, 29, 37–38, 40–41, 56, 61, 65–69, 75, 76, 78, 80, 99, 101, 110, 111
CPA. See Certified public accounting
Customer profitability, 101
Demand efficiency, 117
Earnings, reporting, 7–8
ECD. See Explicit cost dynamics
Effectiveness of capacity dynamics, 59–60
Efficiency, 23–25, 100, 102, 105–107, 113
absolute, 118
capacity dynamics, 58–59
definition of, 115
demand, 117
overall, 117
Exchange of cash, 19
Explicit cost dynamics (ECD), 93–94, 101, 102
contribution margins, 94–95
scope of analysis, 96–97
fixed and variable costs, 95–96
focusing on cash using capacity, 97–98
revisited, 89–92
scope of analysis, 96–97
Financial accounting, 10
Financial viability, 8
Finished goods inventory, 28–29
Fixed costs, 95–96
Foundations, 7–8
cash, generating, 7
earnings, reporting, 7–8
GAAP. See Generally Accepted Accounting Principles
Generally Accepted Accounting Principles (GAAP), 10
Hostile group dynamics, 90
Improved investment, 111
Income statement, 8
cash transactions, 48
consumption of, 53–54
cost determined, 48
cost independent, 48–51
Internal Revenue Service (IRS), 8
Inventory, 27–29
types of
finished goods, 28–29
raw materials, 27
work-in-process, 27–28
Investments
community, 8
improved, 111
Investors, 7
IRS. See Internal Revenue Service
Lean accounting, 11, 15, 19, 23, 75
Less purposeful cost assignment, 66–69
LinkedIn, 38
Managerial information from capacity, 77–86
Modeling cash, 78–80
Money, making, 9–12
Net cash, 9
Non-cash cost (CostNC), 19–21, 39
Numbers, and financial values, 20–21
Obligations, transaction types, 44–45
Ohno, Taiichi, 23
One-off scenarios, transaction types, 44
Operational data, 81
Output capacity
consuming input, 53–54
no cash transaction, 54
Overall efficiency, 117
Pricing, 109
Productivity of capacity dynamics, 60
Product line profitability, 101
accounting, 94
cost definitions of, 11
costing, practice of, 10
depreciation, 12
dynamics of, 109–110
efficiency, 11–12
equation, 9
inventory, 12
revenue recognition, 10
Purposeful allocation techniques, 65–66
Raw materials inventory, 27
Real, definition of, 3
ROI, calculation of, 39
Sales, as proxy, for incoming cash, 14
Sales, general, and administrative (SGA), 41
SEC. See Securities and Exchange Commission
Securities and Exchange Commission (SEC), 8
Segal’s law, 16
SGA. See Sales, general, and administrative
Standard costing, 15
Static capacity. See Input capacity
Throughput accounting, 15
Transactions and capacity, 43–45
Variable costs, 95–96
WACA. See Worth and capacity analysis
Waste reduction activities, 11
Work-in-process, value of, 27–28
Worth and capacity analysis (WACA), 107
Worth, 102–105
explicit cost dynamics, 101
understanding, 99–102