text: Accounting Support and Cost Management
  contribute directly or indirectly to the output, such as direct labor, direct materials, and support activity
  costs.
  5-64. Full cost information helps users determine relevant costs of specific activities, goods and services.
  Full cost should incorporate the full cost of goods and services that it receives from other entities even if
  the receiver who benefits may not have paid for or funded the goods and services.
  5-65. Costing is the expensing of budgetary resources in its basic form. Cost accounting is the central
  concept of managerial accounting and analysis. In most cases, it represents units of work or goods
  consumed in a process and producing outcome data. A full cost approach will be applied in collecting costs
  associated with a cost object. A cost object is an activity, output, or item whose cost is to be measured as
  defined by management. For instance, a brigade combat team or a combined arms battalion could be a cost
  object for a corps or division. For application within a BCT or division, a cost object could also represent a
  one-time event such as a CERP project.
  5-66. Full cost ensures that leaders consider all relevant cost information in order to make resource-
  informed decisions. The Army relies on cost data to program future needs and to justify and defend budget
  submissions to the Office of the Secretary of Defense (OSD) and Congress. Failure to properly capture and
  report full costs jeopardizes operations. Additionally, many Army organizations charge other commands or
  government and commercial entities standard rates for work performed. It is imperative that these rates
  include all the components of the full cost incurred by these organizations when performing work for
  customers. Without full cost information, it is difficult to accurately manage capacity and identify the
  causes of cost savings or overruns. All these factors detract from the ability of the leader or manager to
  make resource-informed decisions.
  5-67. Full cost analysis shall be used in all situations requiring a cost estimate. Examples include cost-
  benefit analysis, capital/lease analysis, make vs. buy decisions, and benchmarking or comparative analysis.
  5-68. Figure 5-5 on page 5-18 illustrates the full cost of maintaining the OR of a BCT at 90%. In this
  example, the BCT is the responsibility segment to the higher headquarters since the BCT commander
  reports directly to the corps or division commander. The BCT’s resources (funds, personnel, and
  equipment) and operational results can be clearly distinguished from those of other BCTs within the higher
  headquarters task organization. The higher headquarters (corps or division) is the reporting entity in this
  example. Battalions subordinate to the BCT could represent subordinate cost centers when developing this
  OR cost model. In this illustration, the financial manager designed the cost models to derive the full cost of
  readiness for the command and used this information to provide valuable cost advice to the BCT
  commander. If the BCT commander wants to raise his unit’s OR above 90%, he requires information on the
  cost consequence of his decision. The cost model can predict the increase costs for each incremental
  increase to OR and inform the commander on the concomitant impact on resources of each change in OR.
  The financial manager develops the cost model and interprets the data from the cost model to develop
  useful and relevant information to improve the commander‘s decision-making and fiscal stewardship. This
  scenario is just one example of the application of cost management