Cost Behaviors and Allocations Essay

The relationship between fixed, variable, and join speak tos of an organization is called speak to behavior. It is also known as underlying cost structure, and is used for planning, control, and last making within the organization. Healthcare organizations face several challenges to try and improve the quality of care and master 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 speediness is closed.Variable costs are related directly to the amount of service that is delivered. These two costs contrive up the underlying cost structure of an organization. For example the costs of supplies used to draw blood in a laboratory, would be the variable costs, the costs to keep the laboratory open would be fixed costs. To image the cost behaviors of the organization you have to figure 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 nice volume that will cover your costs. toll allocation is a very important part of cost measurement. It is a determine process that within the organization where managers allocate the costs of all the departments. Within health care organizations the command processing overhead time costs, costs from patient services departments, and support 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 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. Behavioral Research in report , 10, 78-103. Gapenski, L. (2012). Healthcare finance An introduction to accounting and financial manageme nt (5th ed. ). Chicago Health Administration Press.