Final answer:
True. The statement that calculating product costs for external financial reporting is an important objective of a cost management system is True. Accurate product cost calculation is vital for external financial reporting and internal business decision-making. The correct option is a.
Step-by-step explanation:
An important objective of a cost management system is the calculation of product costs for external financial reporting. This statement is True. Calculating product costs accurately is essential for reporting to external stakeholders, like investors and regulators, and for internal decision-making.
Knowing the total cost--which includes all costs associated with converting inputs into outputs--is crucial for determining the price of goods, understanding the firm's profitability, and managing expenses effectively.
The concept of total cost encompasses the sum of all costs the firm incurs in producing and selling its products.
In business, these costs are used to determine the financial performance of a company and are required for both internal management and external financial reporting.
Cost management systems provide mechanisms for tracking and analyzing these costs, and are tools for ensuring that financial statements reflect the accurate cost of producing goods.
Furthermore, it's important to understand that costs can differ in the short run and the long run, which can impact product pricing and the financial planning of the company.
Therefore, a cost management system is key in capturing this nuanced financial information. The correct option is a.