This chapter (along with Chapter 9) adds a critical layer to this. Again, managers want to hold people and things responsible for the costs they cause because then managers can choose to have more of whatever is profitable and less of whatever is unprofitable in future periods. Since Chapter 2 I’ve repeated the idea that managers can better maximize long-term profitability if they know the profitability of different product units, product lines, departments, teams, regions, and/or individuals. Variance analysis plays a key role in this, but it goes deeper than I discussed in earlier chapters. One of the purposes of cost accounting is to hold people and things responsible for the costs they cause.
