Cost Management

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Category: Business and Industry

Date Submitted: 10/13/2012 09:02 AM

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How to regard the cost

--Importance of costs in decision-making

* Induction

Among all the popular issues that people are talking about recently, one of the hottest is about cost and management accounting in an organization. Accounting is concerned with providing both financial and nonfinancial information that will help decision makers to understanding of the decision-making process and the awareness of the users of accounting information.

At the same time, there has been a significant reduction in product life cycles arising from technology innovations and the need to meet increasingly discriminating customer demands. To compete successfully in today’s highly competitive global environment companies have made customer satisfaction an overriding priority.

Therefore, the paper is to provide an introduction to cost management, cost definition, importance of cost, types of cost, and influence of cost in organizations. In addition, this is followed by an examination of the role of cost management in providing information to manager for decision-making and made conclusion.

* Content

* Definition of Cost

Cost is the commodity economy of an economic category.

* In general perspective, cost is an amount that has to be paid or given up in order to get something.

* In business perspective, cost is usually a monetary valuation of

* effort,

* material,

* resources,

* time and utilities consumed,

* risks incurred

* opportunity

forgone in production and delivery of a good or service.

* All expenses are costs, but not all costs (such as those incurred in acquisition of an income-generating asset) are expenses.

* In my viewpoint, cost is the most significant component of production. It makes enterprise taking materialized labor, necessary labor value in order to provide productions of goods and services to realize the best performance.

* Importance of Cost

* In the economic activity,