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Management Accounting with Strategic Perspective

   

Added on  2021-06-17

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Running head: MANAGEMENT ACCOUNTING WITH STAREGIC PERSPECTIVEManagement accounting with strategic perspectiveName of the StudentName of the UniversityAuthor Note
Management Accounting with Strategic Perspective_1

MANAGEMENT ACCOUNTING WITH STAREGIC PERSPECTIVERequirement a:A cost of capacity is the expense that is incurred on part of organization that isintended to increase the ability for conducting the operations. Such costs are considered to beof fixed nature and they help in increasing the production capacity above certain point thatwould exceed the network of current distribution. Requirement b:The company made investment into additional manufacturing facility for increasingthe sales of products. Consequence of making investment into this new facility wasassociated with increasing sales figure by 30%, tripling of fixed costs and profits turning intolosses. Making investment into this new capacity was not viable because the old plant hadalready the available capacity (Taleb et al. 2015). Requirement c:For developing effective capacity management requires business to have a thoroughunderstanding of how the business demand would influence its components. It incorporatessub process of capacity that is component capacity management, business capacitymanagement and service capacity management (Maas et al. 2016). Requirement d:Practical capacity is the level of output that is manufactured at level that is less thanideal or theoretical capacity. Theoretical capacity on other hand is the level of production bymanufacturers that is attained at level of optimum efficiency (Otley 2016).
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