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Allocations Essay Topics & Paper Examples

Cost Behaviors and Allocations

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…