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Business Fundamentals for Engineering Managers by C.M. Chang

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Chapter 2

Cost Accounting and Control

2.1 Introduction

Cost estimation is the assessment of the value of resources consumed in the generation of a product/service offered for sales. Cost accounting and control are very important management functions in both profit-seeking and nonprofit organizations.

A profit-seeking enterprise strives to maximize its financial gains (e.g., sales revenue minus costs) for its investors. These gains can be sustained over time only if all stakeholders of the firm (e.g., investors, customers, employees, suppliers, business partners, and the community in which the firm operates) are reasonably satisfied. A nonprofit organization (e.g., the United Way, the Ford Foundation, government agencies, educational institutions, ...

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