1. Determine accurate departmental and product costs as a basis for the evaluation of the cost
efficiency of departments and the profitability of different products, for financial reporting,
and for tax compliance.
2. Motivate managers to exert a high level of effort to achieve the goals of top management.
3. Provide the right incentive for managers to make decisions that are consistent with the
goals of top management.
4. Fairly determine the rewards earned by the managers for their effort and skill and for the
effectiveness of their decision making.