Question

Managerial accounting focuses a lot on costs: categorizing costs, controlling costs, reducing costs, etc. Why are costs so important? How does the cost-focus support the decisions that managers make?

Answer 1

Cost of any product is considered as all the expenses which are incurred from raw material to making the product useful to customers, even though selling and distribution costs are also to be considered.

Managerial accounting focuses a lot on costs such as categorising costs, controlling costs, reducing costs etc because any company/entity would always want to make profits and such profits are achieved whenever the costs are known.
So the function of managerial accounting is to manage all the accounts whether they are of costs or sales. According to the costs selling price of a product is set which will include the profits.
So, it can be said that costs are important to be known.

Now how does the cost-focus support the decisions that manages make, are as decision-makings are done according to costs so the higher profits can be achieved or even break-even (where there is no profit no loss) is achieved.
Further the cost-focus approach helps managers in easy decision making as past analysis of costs can be done with the help of managerial accounting and further costs can be controlled.