This document presents a framework for managerial costing that enables organizations to determine what cost information best serves their internal decision support needs while having some assurance that their cost modeling approach is sound. The framework enables the evaluation of costing approaches and helps organizations determine which costing approaches will best match their cost modeling needs based on internationally accepted costing principles.

    The framework focuses on cost modeling for decision support. The intention is to place managerial costing on a clearly established and well-reasoned conceptual foundation of principles, concepts, and constraints to support decision making. The Conceptual Framework of Managerial Costing is not a specific costing approach. Rather, the framework provides a beneficial, comprehensive, and logical baseline for comparing, selecting, implementing, or designing costing approaches.

    The need to create a conceptual framework results from two problems. First, financial accounting and reporting for external users is guided by standards, regulations, and rules that impair the creation of optimal cost information for internal decision use. Second, although cost information is useful for a variety of purposes for both external and internal users, the most appropriate cost modeling approach for decision support inside organizations has not been universally agreed upon or the criteria for a modeling approach has not been articulated clearly.

    The desired outcome of the Managerial Costing Conceptual Framework is to help organizations design and build principles-based cost models that managers can successfully apply to improve their operations and achieve their strategic goals.