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Allocation Essay Topics & Paper Examples

Cost Behaviors and Allocation

The relationship between fixed, variable, and total costs of an organization is called cost behavior. It is also known as underlying cost structure, and is used for planning, control, and decision making within the organization. Healthcare organizations face several challenges to try and improve the quality of care and reduce costs at the same time. Their response to how to do this describes their cost behavior. Fixed costs is a cost that are certain regardless of the volume of services that are delivered and will occur even if the facility is closed. Variable costs are related directly to the amount of service that is delivered. These two costs make up the underlying cost structure of an organization. For example the…

Destin Brass Products Co.

The estimated costs calculated using the activity-based costing method is very different from the existing standard unit costs and the revised unit costs. Exhibit 3 uses the traditional cost allocation system, which allocates all costs based on measures of volume. In the standard unit costs, Destin Brass uses direct labor as the only cost driver, which rarely meets the cause-effect standard wanted in cost allocation. Exhibit 4 is similar to exhibit 3, but instead, 4 uses materials and machine hours as the cost driver instead of just direct labor. The new costs are calculated by using the ABC system, which allocates costs that are caused by non-volume-based cost drivers. After recognizing the overhead activities, costs of overhead resources used for…

Healthcare Finance

Houston Dialysis Center is a department of Houston General Hospital, a full-service, not-for-profit acute care hospital with 325 beds. The bulk of the hospital’s facilities are devoted to inpatient care and emergency services. However, a 100,000 square-foot section of the hospital complex is devoted to outpatient services. Currently, this space has two primary uses. About 80 percent of the space is used by the Outpatient Clinic, which handles all routine outpatient services offered by the hospital. The remaining 20 percent is used by the Dialysis Center. The Dialysis Center performs hemodialysis and peritoneal dialysis, which are alternative processes for removing wastes and excess water from the blood for patients with end-stage renal (kidney) disease. In hemodialysis, blood is pumped from…

Template: Identifying cost drivers

Cost drivers are measurable factors that allow you to determine the relationship between the indirect cost and each program area. They are program-related units that cause an indirect cost to increase or decrease. Another way to think about it would be factors that can approximate the demand that each of your program places on the particular resource item. The appropriate driver may be different for each cost item, depending on which is the root unit that drives that particular expense, and it is up to you to determine the most relevant driver for your costs. For each cost item, you can use this guiding question to determine the most appropriate driver: What program-related factor causes this cost item to increase…