Question

The development of management accounting can be seen as going through four distinct phases. During which phase was management accounting mainly concerned with determining the cost of goods and services​ produced?

A. Phase 1
B. Phase 2
C. Phase 3
D. Phase 4

Answer 1

The focus on determining the cost of goods and services was part of Phase 1 in the development of management accounting, where the primary goal was to record and classify cost information for pricing, efficiency measurement, and budgeting.

Step-by-step explanation:

The phase of management accounting during which it was mainly concerned with determining the cost of goods and services produced is Phase 1. During this initial phase, the focus was on accumulating costs associated with production processes to assist in setting prices and measuring efficiency. In this period, the role of management accounting was primarily to classify and record cost information in a systematic fashion and use it to inform managers about production costs and assist with budgeting and cost control. This formed a foundation for future decisions but was less comprehensive than later phases which integrated more strategic and decision-making aspects. The analysis of costs from a long-run perspective is crucial for the strategic planning and helps in understanding the firm's profit-maximizing decision-making.