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Abstract
Cost accounting and analysis are important for improving budgeting, performance evaluation, and resource allocation decisions. Spending budgets are basically the aggregation of the allowed costs of producing goods and services in certain quantities. Government officials are urged to make resource allocations on a rational basis; that is, by comparing the costs and benefits of alternatives. This calls for the identification and projection of those alternatives. These and other examples point to the general need for cost information in government. More specifically, since government is supposed to operate on a not-for-profit basis, cost is—or should be—used as a basis to set user fees—and perhaps taxes as well, if possible. Furthermore, government operations should be economical and efficient in order to keep taxes and fees as low as possible.
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