why should manager assign cost to products to facilate internal planning, controlling and decision making and...

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why should manager assign cost to products to facilate internal planning, controlling and decision making and...

why should manager assign cost to products to facilate internal planning, controlling and decision making and for external financial reporting ?

business accounting

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Answer 1

Answer #1

Cost Accounting is a method of accounting wherein all the costs involved in the project or product are noted, analyzed and the most appropriate cost is arrived at.
Using the principals of Cost Accounting, the manager should adopt the most appropriate cost to be assigned to a particular product.
Adopting and assigning the appropriate costs will assist the management in taking strategic decisions, such as determining the viability of the product, determining the profit margins, future expansion or downsizing, etc
Assigning costs serves another major purpose, that is it quantifies things. Provides measurability.

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