While the ultimate choice of which costing method to use should be left to your company’s financial management team and CPA, I can offer the following thoughts: Also, cost accountants are, at times, responsible of informing management with the future cost of items. There are no GAAP rules for managerial accounting, so a company’s cost accounting should be tailored to provide management with the information they need.
As for managerial accounting, cost accountants are responsible for providing “actionable information” to the management team so that management can make necessary adjustments to improve a company’s financial performance.
In large part, “Cost Accounting” should be considered “Managerial Accounting,” not “Financial Accounting.” The exception to this is that cost accountants are responsible for providing and being able to validate the value of inventory items on the balance sheet. I am often asked by manufacturers, “Which costing method should we ue in our Microsoft Dynamics NAV system?” Before addressing the question, let’s set the stage with some important definitions.
