ABSTRACT
The pursuit of organizational goals requires the acquisition and use of resources and this generates costs. Creating profit, increasing market share or enhancing sustainability are all commercial goals involving resource consumption and so they have a direct link to cost while in a not-for-profit setting the need to adhere to budgetary constraints ensures that cost also plays an important part in organizational functioning. Understanding the nature of costs, how they behave and their links to value creation therefore constitutes an important aspect of organizational management. This information represents much of the knowledge that facilitates sound cost management, i.e. the use of cost-related information as a lens through which the organization is represented to and viewed by management as they strive to gain improvements in economy, efficiency and effectiveness. Costs have a direct impact on profit but they are also linked to the other key financial elements of revenue generation, investment and funding. Thus, rather than being viewed and managed in isolation these links have to be kept under consideration. Consequently, a strong managerial demand exists for a wide variety of information to enable successful cost management to occur.
