The Cost of Managing Information

The Cost of Managing Information

Copyright: © 2019 |Pages: 23
DOI: 10.4018/978-1-5225-8410-0.ch015

Abstract

This chapter focuses on budgets, financial decisions, and costs to support your information strategy. The chapter explains the basic types of costs to consider and how costs are treated from a cost accounting perspective.
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Cost Accounting And Investments

The term cost has many formal and informal meaning (Drury, 2013; Horngren, 2009). In its simplest form it is the amount that has to be paid or spent to buy or obtain something. Our focus in this book has been on information as a capital asset. Capital assets have costs. By costs we sometimes mean the amount that we invest in capital assets to derive value. By costs we sometimes mean a liability – something that is owed for the asset or a deficiency or negative value that is created by the asset. The goal of this chapter is to clearly differentiate between costs, investments and liabilities.

Cost Accounting, Costs and Investments

The context for discussing costs is cost accounting. Cost accounting is an accounting method that describes a company's costs of production taking into account both the variable input costs of each stage of production and the fixed costs required to support production. Cost accounting compares inputs to outputs to better understand financial performance. In the context of cost accounting for information assets, this means considering the full range of cost types, including direct costs, indirect costs, fixed costs,

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