The Accounting Review Vol. 20 No. 2 1945
FIXED EXPENSE.
Abstract
Contrary to belief in some quarters, cost accounting is not management. It can only record and report facts, and, to a certain extent, interpret them to management. It can show the effects that variations in activity, changes in engineering, new methods of production, shifts in managerial policies, and so on have on the costs of the functional steps in production. Like the barometer, it can only reveal the conditions of the moment. Just as the barometer records the facts from which action in preparation for fair or foul weather should result, so also the cost system can reveal the facts from which managerial decision and action should follow. The barometer does not cause storms nor bring fair weather; neither does good cost accounting cause or improve the conditions, which it reveals. It should be evident that the primary objective of cost accounting should be to furnish factory management with reliable data relative to the costs of services and of the functional sequences of production. It should also be evident that certain aspects of factory management can be no better than the functional cost data upon which it relies, and that the only adequate information for management is truth, or as near to truth as is possible.
- DOI
- 10.2308/tar-7037291
- Volume
- 20
- Issue
- 2
- Pages
- 156-163
- Language
- en
- Sources
- openalex crossref