Unformatted text preview: tly, the key question
is “What does management find useful?” It is this question that must drive the cost-accounting effort.
Because there are no cost-accounting rules similar to GAAP in financial accounting, we now move to a discussion of the conceptual structure that underlies a cost-accounting effort, after which we will look at several key cost
accounting decisions. These decisions will affect the way the accounting staff gathers and presents information for
the purpose of calculating the cost of an organization’s goods or services.
RESOURCE USAGE: A CONCEPTUAL FRAMEWORK
The fundamental issue that cost accounting addresses is the use of resources. Accordingly, an appropriate
question to ask is “What are these resources and how might they be defined and measured?”
At the most fundamental level, the resources used in any organization—manufacturing, merchandising, or
service—are the classic ones of the economist: land, labor, and capital. These resources are shown schematically in
Exhibit 1-1. Take a few minutes now to review this exhibit so you can...
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- Spring '14
- ........., Boston University School of Management, Crimson Press Curriculum Center, Professor of Accounting and Control