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Introduction to Managerial Accounting



In managerial accounting, managers analyze financial information to make better decisions and identify areas that the company could improve. One of the most important concepts in managerial accounting is costing. Costing is the process of identifying the expenses or cost involved in the production process. Managers use costing to help assign pricing. All expenses that a company incurs are categorized as either fixed costs or variable costs. Which category a cost falls into depends on whether it varies with activity levels. Managers also consider differential costs—in other words, how much money it will cost to choose Option A instead of Option B. Managers use still other factors to make decisions, such as sunk costs and opportunity costs.

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