text: Chapter 5
  COST MANAGEMENT CONCEPTS
  5-57. The Army cost management process is designed to apply continuously cost controls and strategies to
  use efficiently the available financial resources to achieve the best results preserving a culture of cost
  awareness into the organizational operations.
  5-58. The concept of full cost, as described in the following section, requires an understanding of the
  various cost types involved in cost accounting. Full cost encompasses all types of costs: direct, indirect,
  funded, unfunded, variable, fixed, sunk, incremental, avoidable, and unavoidable. All costs needed to
  produce a unit of output (product or service) require allocation to an output regardless of the classification
  of the cost. The following costs are encompassed in full cost, but full cost is not limited to these costs.
  Refer to this manual‘s glossary for definitions of these costs.
  COST CENTER
  5-59. Cost Center serves as a base for a management optimization model utilized to reflect the
  business, its inputs, conversions, and outputs in order to support management decisions. A Cost
  Center is a responsibility center that incurs costs and has a manager who is accountable for those costs.
  This definition allows multiple and varied levels of cost centers within an organization in order to capture
  all costs associated with the organization. The purpose of the cost center is to serve as a base for a
  management optimization model – a model that reflects the business, its inputs, conversions, and outputs in
  order to support management decisions. The cost center is the first cost object defined when developing a
  cost model.
  RESPONSIBILITY SEGMENT
  5-60. A responsibility segment is a component of a reporting entity that is responsible for carrying out
  a mission, conducting a major line of activity, or producing one or a group of related products or
  services. Responsibility segments usually possess the following characteristics:
  * Commanders or managers of responsibility segments report directly to the reporting entity’s top
  leadership, such as in the reporting relationship between a BCT commander and a division
  commander.
  * The responsibility segment’s resources and operational results can be clearly distinguished from
  those of other segments.
  REPORTING ENTITIES
  5-61. Reporting entities issue general purpose financial statements to communicate financial and related
  information about the entity. For an entity to be a reporting entity, as defined by the Statement of Federal
  Financial Accounting Concepts, it would need to meet all of the following criteria: There is management
  responsible for controlling and deploying resources, producing outputs and outcomes; executing the budget
  or a portion thereof (assuming that the entity is included in the budget); and held accountable for the
  entity's performance.
  5-62. The designation of a cost center, responsibility segment, and/or reporting entity requires analysis of
  the organization, activity, project, or program in question. The financial manager must consider the
  requirement for the cost analysis or cost management initiative when developing the cost model and
  identifying cost centers, responsibility segments, and reporting entities. The level of cost capturing,
  reporting, and the supported decision-maker can also determine whether an organization is a cost center,
  segment, or entity. In many cases, higher headquarters will identify the reporting entity for the subordinate
  units.
  FULL COST
  5-63. Full cost is the sum of all costs, regardless of funding source, required by a cost object - to
  include all direct materials, direct labor, and support activity costs – to produce or provide a
  product, service, customer, or outcome. Full cost includes the costs of resources consumed that