The Concept and Role of Full-Cost Accounting

Question: Explain the concept of ‘full-cost accounting’ and the role it plays in Schmidtz’s argument.

To commence with, in fundamental terms, one could proclaim CBA-otherwise deemed as ‘Cost-Benefit Analysis can be accounted as an analytic, systematic tool, manipulated in order to make decision for, perhaps, almost anything. Now, in addition, because many spates and variations of CBA exist, it is quite veracious, there are, of course, some forms of BA no ethicist would defend (Schmidtz, 2001). Among the few, CBA with full-cost accounting deems to execute the decision-making procedures, while taking “all known costs, external as well as internal into account” (Schmidt 2001, pg.

388). Moreover, if one were to comprehend CBA in this form, it is not only an accounting, nor an analytical, decision-making tool; on the contrary, if one must know, it can also be regarded as a variation of CBA, which in a sense, forces an individual to take full-responsibility for plausible consequences of their actions (Schmidtz, 2001).

Furthermore, Schmidt incontestably argues no innocent party or bystander should bear any external costs emanated by the ignorant decisions from certain individuals.

In addition, Schmidt proclaims the inevitable fact decision-makers should, of course, be held accountable pertaining to environmental costs by providing a CBA with full-cost accounting (Schmidtz, 2001). One can presume, in this fundamental sense, the concept of full-cost accounting trifles a great role in Schmidt’s argument, considering it disciplines and educates decision-makers to become aware of the external and internal costs; in this procedural fashion, costs which would not have been deemed through BA without full-cost accounting, are not foisted upon innocent bystanders (Schmidtz, 2001).

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Hence, Schmidt grants the example of a business tarnishing the environment through pollution; presumably, it would be most correct for this business to pay for the veracious, full cost for their operation (Schmidtz, 2001). Thus, this indisputably means, social, cultural, and not to mention, legal arrangements, should prod individuals to become aware of the full environmental, and human costs they emanate. This seems to be one of the reasons as to why CBA is deemed a friend of the environment.

References

1. Schmidtz, D. (2001). A Place for Cost-Benefit Analysis. Philosophical Issues, 11(1), 148- 171. doi: 10.1111/j.1758-2237.2001.tb00042.x