Cost accounting goal is to assist managers in achieving the maximum value for their organizations. Measuring the effects of decisions on the value of the organization is one of the fundamental services of cost accounts.
Providers of information = accountants
Users of information = managers
We want the value chain to be as efficient as possible
Value chain goes from beginning to end (complete end/disposal)
Managers evaluate value-added activities (activities that customers perceive as adding utility to the goods or services they purchase) to determine how they contribute to the final product’s service, quality, and cost.
Financial accounting teaches us to prepare and interpret ...view middle of the document...
Cost information is a product with its own customers/ who happen to be managers
Main problem with cost accounting is the misuse of cost accounting information. If a manager tries to use accounting information for external reporting & decision making. Decision-making requires different info from that provided in financial statements to shareholders.
Manager’s job is to make decisions
They do this by viewing information from the accounting system.
The information given needs to be good for those manager’s to make proper decisions for the organization.
Manager’s remove nonvalue-added activites to add value because activities cause costs and if an activity does not add value to the company than removing it means we also removed the cost associated with it.
Activities cause costs
Repairing defective units is a nonvalue added activity
“The concept of considering both the costs and benefits of a proposal is cost-benefit analysis. Managers should perform cost-benefit analyses to assess whether proposed changes in an...