Cost Behaviors and Allocations Essay

The relationship between fixed, multivariate, and arrive cost of an system of rules is called cost behavior. It is also known as fundamental cost structure, and is used for planning, control, and decision making within the organization. Healthcare organizations administration several challenges to try and improve the quality of care and reduce cost at the same time. Their response to how to do this describes their cost behavior. Fixed be is a cost that are certain regardless of the mass of function that are delivered and will occur even if the facility is closed.Variable be are related directly to the amount of service that is delivered. These two cost make up the underlying cost structure of an organization. For example the be of supplies used to draw blood in a laboratory, would be the variable be, the be to keep the laboratory open would be fixed costs. To agnise the cost behaviors of the organization you have to figure out the relationship these costs have with the a mount of services that they are delivering.To manage your costs you emergency to make sure that you are bringing in enough volume that will cover your costs. greet allocation is a very in-chief(postnominal) part of cost measurement. It is a pricing process that within the organization where managers allocate the costs of all the departments. Within healthcare organizations the overhead costs, costs from patient services departments, and support costs have to be allocated. cod to this pricing and service offerings are based on the total costs in relation with each services.If the allocations of overhead costs are allocated aright the organization is better able to make good decisions for the organization. Works Cited Evans III, J. H. (1998). Cost Management and Management Control in Healthcare Organizations Research Opportunities. behavioural Research in Accounting , 10, 78-103. Gapenski, L. (2012). Healthcare finance An introduction to account statement and financial managemen t (5th ed. ). Chicago Health Administration Press.