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Unformatted text preview: . However, senior management makes no
effort to determine, for example, the cost of kitchen labor included in each meal. As a result, the cost of goods sold
on a restaurant’s financial statement refers only to ingredients, and not to labor.
Role of Senior Management
As the above discussion suggests, if senior management sees a need for cost information, it can compute costs
in a variety of ways, many of which can be defended as valid. However, because the cost-accounting effort is inherently complex in any good sized organization, some approaches to computing full costs can produce quite misleading results. Moreover, in many organizations, the cost accounting effort is complicated by questions of product or
David W. Young • Management Accounting for Managers • Chapter 1
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service mix, standby capacity, customers’ use of related products and ser...
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- Spring '14