财务会计3828840.pdfVIP

Management Accounting | 51 Classification of Manufacturing Costs and Expenses Introduction Management accounting, as previously explained, consists primarily of planning, performance evaluation, and decision?making models useful to management in making better decisions. In every case, these tools require cost and revenue infor? mation. A basic assumption of management accounting is that it is the responsibility of the management accountant to provide the needed cost and revenue information. Consequently, the management accountant needs a complete understanding of the different types of costs required by the various models. In Figure 4.1, the major costs associated with each management accounting tool is listed. In management accounting, as in financial accounting, it may be said that a major building block in the conceptual foundation is cost. Both the financial and manage? ment accountant must have a sound understanding of the varied and complex rami? fications of cost. From a financial accounting viewpoint, a faulty understanding of cost may cause financial statements to be incorrectly prepared. From a management accounting viewpoint, an inadequate understanding or use of costs will result in poor decisions. There are two broad aspect of the term cost that needs to be understood: cost classification and cost behavior. Cost classification refers to the separation of costs into categories for proper preparation of financial statements or for use in deci? sion?making models. Cost behavior refers to the effect that volume (production or sales ) has on total expenses or costs. In this chapter, both aspects will be discussed in some depth. 52 | CHAPTER FOUR ? Classification of Manufacturing Costs and Expenses Cost Classification In accounting, the term cost refers to the expenditure or sacrif