Cost Behaviors and Allocation Essay

The relationship between fixed, vari fitted, and total monetary values of an organization is c aloneed cost behavior. It is also known as vestigial cost structure, and is used for planning, control, and conclusion making within the organization. Healthc atomic number 18 organizations face several challenges to try and ameliorate the quality of c ar and reduce costs at the same time. Their answer to how to do this describes their cost behavior. Fixed costs is a cost that are certain regardless of the volume of work that are delivered and will total even if the facility is closed.Variable costs are related now to the amount of service that is delivered. These two costs make up the underlying cost structure of an organization. For example the costs of supplies used to draw line of products in a science laboratory, would be the variable costs, the costs to keep the laboratory open would be fixed costs. To understand the cost behaviors of the organization you run through to fig ure out 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. damage allocation 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 up costs have to be allocated. Due to this pricing and service offerings are based on the total costs in relation with separately services.If the allocations of overhead costs are allocated properly the organization is better able to make good decisions for the organization. Works Cited Evans III, J. H. (1998). Cost Management and Management mark off in Healthcare Organizations Research Opportunities. Behavioral Research in account statement , 10, 78-103. Gapenski, L. (2012). Healthcare finance An introdu ction to accounting and financial management (5th ed. ). kale Health Administration Press.