Misclassification of Costs and Their Influence on Profit Optimization

Abstract

This study examines the impact of cost misclassification on profit optimization and how management accounting strategies can mitigate these issues. Using a literature review approach, we analyze various cost classification errors and their consequences on financial decision-making. Effective management accounting strategies, including cost control, profit planning, and internal control enhancement, play a crucial role in ensuring financial accuracy. The findings suggest that proper cost classification and robust accounting strategies improve profitability and business sustainability. Strengthening internal controls and leveraging technology can further enhance financial transparency and operational efficiency.