Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 16

Consider the In Action feature, “Customer Profitability—Revenue and Cost Effects.” What are some of the factors managers should consider before blocking or downgrading service to a set of customers viewed as being unprofitable for the company to serve?

Step 1 of 2

Cost accounting system

This is a system designed for inhouse or internal managers and their decision making. Cost accounting information is not needed for comparison with other companies. This information is commonly used in financial accounting also, but it is primarily used by company managers for their decision making. It is important that cost accounting information is relevant for the decision making of the manager.