Abstract
Due to the intensified price competition in an era of slow growth, cost management focusing on marginal income dealing with a single variable cost is becoming inadequate. It is necessary to rapidly grasp the changes in product cost and earnings as they correspond to changes in the market. This research proposes a method of cost management for understanding such changes structurally and in detail. In the method, a set of activities called "transactions" is identified in a process model where the costs of materials, equipment and others are measured for each activity. The process model is converted into a cost structure matrix to clarify how to calculate the product cost and earnings when market changes are given. This method provides a cost management model that enables quantitative grounds for decision-making
