Final answer:
Cost management information supports strategic management by providing necessary details for resource allocation through mathematical models, estimating costs for comparison, and attracting external investors by offering transparent data on the company's financial status.
Step-by-step explanation:
Cost management information is integral for strategic management because it enables businesses to make informed decisions on resource allocation, given that resources are scarce. In the design process, mathematical models can be utilized to estimate costs associated with various strategies and alternative solutions. These models not only assist during the idea generation phase but also help in establishing the cost-effectiveness of different approaches by normalizing costs, such as the cost per thousand gallons of water, for comparable analysis.
As a company matures, detailed knowledge of its business plans, products, revenues, costs, and profits replaces the need for a personal understanding of individual managers. This abundance of information about the company's financial health attracts external investors like bondholders and shareholders, who are more willing to provide financial capital even without a personal connection to the firm's managers. Thus, cost management information is a vital part of the economic framework necessary to use scarce resources optimally and attract investment.