Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed


Correcting students misconceptions



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solutions-manual-to-bhimani-et-al-management-and-cost-accounting-pearson-2012-1
Correcting students misconceptions
These TOC definitions differ from conventional accounting definitions. TOC’s throughput CM = Sales + DM (rather than Sales − DM). TOC effectively assumes that DL and all OH items are fixed costs. TOC uses the term stock or investment to refer to productive assets, including stock, RD and PPE. The main point of TOC is consistent with Chapters prescriptions. When faced with a constraint, the aim is to maximise the CM/unit of the constraining factor. TOC has a short-run orientation, as it considers all costs other than DM to be fixed. In the long run, of course, most such costs are not fixed.

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