In Choosing a Cost Management System, the Controller Must Balance

question 108

Essay

In choosing a cost management system, the controller must balance the total costs of implementing such systems. What costs must be balanced to determine total cost? How do functional-based and activity-based cost systems balance the trade-offs?

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Definitions:

Functional Currency

The primary currency of the primary economic environment in which an entity operates, used in generating and expending cash.

Exchange Rates

The worth of one currency when converted to another, establishing how much one currency can be exchanged for another.

Operating Expense

Recurring expenses incurred during normal business operations, such as rent, utilities, and salaries.

Parent Corporation

A larger corporation that owns more than half the stock of another firm, allowing it to control the subsidiary's management and operations.