As a management accountant at heart, I strive to help people understand how to grow the business profitably for the long term. Because of this I am constantly frustrated by people trying to make business decisions at micro levels, with no consideration of the bigger picture.
As cost accountants a lot of us spend an inordinate amount of time allocating/assigning cost in a futile attempt to get accuracy that does not exist in the first place. What we really need to do, is take a step back, consider the decisions being taken on the information we provide, and tailor the information to suit the decision at hand. It is for this reason that no one cost system is the Holy Grail and never will be.
Costs should only be included in any analysis if they truly change based on the decision.
For example, most companies include fixed cost in product costing (full absorption) and use these numbers to decide whether to make a product or source it. However, in most cases if you outsource the product the fixed cost, and a large part of traditional variable cost, will not go away and is irrelevant to the decision.
If the product is a large part of your capacity then you may indeed be able to trim your fixed cost through layoffs, but you need to look at this from a capacity level not a unit cost level. You need to understand the non-financial indicators involved such as total hours reduced (how many people does this account for, remembering you may not be able to eliminate part of a person), activities reduced such as movements around the plant and again translate this into people.
This is an example of a decision that is made every day in companies on a unit cost basis but should be done from a total impact to the company.
It is our job as management accountants to educate the decision makers in these numbers. Step back, look at the information you are providing, and never take your eye off the big picture!