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Chapter 4 Describe the purposes of cost management systems. A cost management system (CMS) is a collection of tools and techniques that identify how managerment’s decisions affect costs. A cost management system provides (1). Cost information for strategic management decisions, (2). Cost information for operational control, and (3). Measures of inventory value and cost of goods sold for financial repotting to investors, creditors, and other external stakeholders. The management uses of information drive the need for sophisticated cost management systems. Managers need accurate and timely cost information for strategic reasons. For these decisions, managers want to know the costs of individual products, services, customers, customers, and processes associated with value-chain functions. Managers must also strive for efficiency by controlling costs. To assess process improvement efforts and other operational cost control programs, managers need accurate and timely feedback on costs. Cost accounting is that the part of the cost management system that measures costs for the purposes of management decision making and financial reporting. Explain the relationship among cost, cost object, cost accumulation, and cost assignment. Cost object (cost objective): Anything for which decision makers desire a separate measurement of costs example include departments, products, activities, and territories. The cost data that managers use for decision making come from the cost accounting system. The cost accounting systems need to provide accurate and timely cost information to help managers make decisions. Without accurate and timely cost information, many decisions can be downright harmful. The cost accounting system typically includes two processes: (1). Cost accumulation: collecting costs by some “natural” classification, such as materials or labor, or by activities performed such as order processing or machine processing. (2). Cost assignment: attaching costs to one or more cos