A Framework for Cost Accounting and Cost Management

Learning Objective 8 Describe a framework for cost accounting and cost management

• three features that help managers make decisions

The following three features of cost accounting and cost management can be used for a wide range of applications:

1. Calculating the cost of products, services, and other cost objects.
2. Obtaining information for planning and control and performance evaluation.
3. Analyzing the relevant information for making decisions.

We develop these ideas in Chapters 3 through 12. The ideas also form the foundation for the study of various topics later in the text.

Calculating the Cost of Products, Services, and Other Cost Objects

You have already learned that costing systems trace direct costs and allocate indirect costs to cost objects. Chapters 4 and 5 describe systems such as job costing and activity-based costing, which are used to calculate total costs and unit costs of products and services. The chapters also discuss how managers use this information to formulate business strategies and make pricing, product-mix, and cost-management decisions.