Cost Behaviors and Allocation Essay Example for Free

greet Behaviors and Allocation EssayThe relationship between fixed, variable, and gist costs of an organisation is called cost behavior. It is also cognise as underlying cost structure, and is used for planning, control, and decision making within the organization. healthcare organizations face some(prenominal) 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 function that are delivered and will occur even if the facility is closed. Variable costs are related straightaway to the amount of service that is delivered. These two costs pick out up the underlying cost structure of an organization. For modelling the costs of supplies used to draw blood in a laboratory, would be the variable costs, the costs to salvage the laboratory open would be fixed costs. To understand the cost behaviors of the organization you have to figure come out of the closet the relationship these costs have with the amount of services that they are delivering.To manage your costs you want to make sure that you are bringing in enough volume that will cover your costs. Cost tryst is a very important 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 hold costs have to be allocated. Due 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 properly the organization is go against 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. Behavioral Research in Accounting , 10, 78-103. Gapenski, L. (2012). Healthcare finan ce An introduction to accounting and monetary management (5th ed. ). Chicago Health Administration Press.