A Modified Method of Activity-based Costing for Objectively Reducing Cost Drivers in Hospitals

2006 ◽  
Vol 45 (04) ◽  
pp. 462-469 ◽  
Author(s):  
S. Toyabe ◽  
S. Kurashima ◽  
M. Okada ◽  
K. Akazawa ◽  
P. Cao
Keyword(s):  
Indirect Cost ◽  
Cost Estimation ◽  
Hospital Costs ◽  
Indirect Costs ◽  
Cost Driver ◽  
Medical Services ◽  
Activity Based Costing ◽  
Cost Drivers ◽  
Abc Method ◽  
The Cost

Summary Objectives: Activity-based costing (ABC) is widely used to precisely allocate indirect costs to medical services. In the ABC method, the indirect cost is divided among the medical services in proportion to the volume of “cost drivers”, for example, labor hours and the number of hours of surgery. However, the workload of data collection of cost drivers can be time-consuming and a considerable burden if there are many cost drivers. The authors aim to develop a method for objectively reducing the cost drivers used in the ABC method. Methods: In the ABC method, the cost driver is assigned for each activity. We assume that these activities and cost drivers are the best combination. Our method, that is cost driver reduction (CDR), can objectively select surrogates of the cost drivers for each activity in ABC from candidate cost drivers. Concretely, the total indirect cost of an activity is temporarily allocated to the medical services using each candidate of cost drivers. The difference between the costs calculated by each candidate and the proper cost driver used in ABC is calculated to evaluate the similarity by the evaluation function. Results: We estimated the cost of laboratory tests using our method and revealed that the number of cost drivers could be reduced from seven in the ABC to four. Similarly, the results of cost estimation obtained by our method were as accurate as those calculated using the ABC. Conclusions: Our method provides two advantages compared to the ABC method: 1) it provides results that are as accurate as those of the ABC method, and 2) it is simpler to perform complicated estimation of hospital costs.

scholarly journals Application of the Activity-Based Costing Method for Unit-Cost Calculation in a Hospital

2015 ◽  
Vol 8 (1) ◽  
pp. 165 ◽  
Author(s):  
Mahdi Javid ◽  
Mohammad Hadian ◽  
Hossein Ghaderi ◽  
Shahram Ghaffari ◽  
Masoud Salehi
Keyword(s):  
Unit Cost ◽  
Cost Price ◽  
Medical Services ◽  
Cost Calculation ◽  
Accounting System ◽  
Activity Based Costing ◽  
Hospital Managers ◽  
Cost System ◽  
Abc Method ◽  
The Cost

<p><strong>BACKGROUND:</strong> Choosing an appropriate accounting system for hospital has always been a challenge for hospital managers. Traditional cost system (TCS) causes cost distortions in hospital. Activity-based costing (ABC) method is a new and more effective cost system.</p> <p><strong>OBJECTIVE:</strong> This study aimed to compare ABC with TCS method in calculating the unit cost of medical services and to assess its applicability in Kashani Hospital, Shahrekord City, Iran.‎</p> <p><strong>METHODS:</strong> This cross-sectional study was performed on accounting data of Kashani Hospital in 2013. Data on accounting reports of 2012 and other relevant sources at the end of 2012 were included. To apply ABC method, the hospital was divided into several cost centers and five cost categories were defined: wage, equipment, space, material, and overhead costs. Then activity centers were defined. ABC method was performed into two phases. First, the total costs of cost centers were assigned to activities by using related cost factors. Then the costs of activities were divided to cost objects by using cost drivers. After determining the cost of objects, the cost price of medical services was calculated and compared with those obtained from TCS.‎</p> <p><strong>RESULTS:</strong> The Kashani Hospital had 81 physicians, 306 nurses, and 328 beds with the mean occupancy rate of 67.4% during 2012. Unit cost of medical services, cost price of occupancy bed per day, and cost per outpatient service were calculated. The total unit costs by ABC and TCS were respectively 187.95 and 137.70 USD, showing 50.34 USD more unit cost by ABC method. ABC method represented more accurate information on the MAJOR COST COMPONENTS.</p> <p><strong>CONCLUSION:</strong> By utilizing ABC, hospital managers have a valuable accounting system that provides a true insight into the organizational costs of their department.<strong></strong></p>

scholarly journals ACTIVITY BASED COSTING SYSTEM : MODEL PENELUSURAN BIAYA OVERHEAD YANG AKURAT PADA UMKM SILK HOUSE SABBENA SOPPENG

2020 ◽  
Vol 4 (2) ◽  
pp. 310-322
Author(s):  
Syamsu Alam
Keyword(s):  
Production Process ◽  
Product Category ◽  
Cost Driver ◽  
System Model ◽  
Activity Based Costing ◽  
Cost Drivers ◽  
The Difference ◽  
Costing System ◽  
The Cost ◽  
Descriptive Method

This study aims to trace the absorption of overhead costs in the production process at Sabbena Soppeng's silk house, to identify appropriate cost drivers in allocating overhead costs to products that are accurate and do not occur distortion. This research uses descriptive method. Collecting data through interviews, observation, documentation. The analysis was carried out by applying a two-stage activity-based costing model. First, trace overhad costs to the “cost pool”. Second, trace the overhead costs to the product using multiple cost drivers. The results showed: a) the product category " Kain Sutera" shows a smaller difference of Rp. 3,253.62; b) product category "Sarung sutra ST-0 Standar" shows a bigger difference of Rp 10,997.4; c) product category "Sarung sutera ST-1 Standar" shows a bigger difference of Rp 22,420.49; d) product category "Sarung sutera ST- Sedang" shows a bigger difference of Rp. 28,352.51; e) product category “Sarung Sutera ST-ASL” shows a bigger difference of Rp. 278,342.75. The difference is due to the fact that the traditional overhead system does not use several cost drivers. Meanwhile, the ABC system uses a multi cost driver in charging BOP. So that with the ABC System it is considered that the BOP allocation is more accurate. Keywords : Activity Based Costing, Cost of Production.

scholarly journals Perhitungan tarif kamar hotel menggunakan activity based costing pada Hotel Sapadia Kotamobagu

2020 ◽  
Vol 2 (2) ◽  
pp. 103
Author(s):  
Rendy Julian David ◽  
Ventje Ilat ◽  
Jenny Morasa
Keyword(s):  
Cost Driver ◽  
Production Volume ◽  
Determination Method ◽  
Activity Based Costing ◽  
Overhead Cost ◽  
Hotel Room ◽  
Cost Of Production ◽  
Abc Method ◽  
The Cost

This research was conducted with purpose to compare the determination of hotel room rates by determining the cost of production issued by the company, in determining existing hotel room rates. The hotel company, named the Hotel Sapadia Kotamobagu. In this study the determination of hotel room rates will use the Activity Based Costing (ABC) method as a comparison with the room rates determination method used by the Sapadia hotel company. ABC Method Improves the accuracy of calculating goods cost by determining how much the overhead cost remain different in comparison to change other than based on production volume. The cost driver is one of the ABC elements which explain the overhead cost.

scholarly journals A case study on the application of activity based costing on the magnetic inductor

2021 ◽  
Vol 10 ◽  
pp. 195-205
Author(s):  
Nurul Farahin Zamrud ◽  
Sri Nur Areena Mohd Zaini ◽  
Mohd Yazid Abu
Keyword(s):  
Cost Accounting ◽  
Cost Driver ◽  
Production Costs ◽  
Activity Based Costing ◽  
Economic Reality ◽  
Abc Method ◽  
The 1960S ◽  
The Moment ◽  
The Cost

Speedy improvements in cost accounting since the 1960s have been noticed, particularly after the 1980s, in the percentage of total cost, overhead costs have increased. The problem of overhead allocation was faced by several companies and a disparity between the available methods of overhead allocation was developed. Because of skewed facts about the viability of their orders, goods and clients, traditional cost accounting (TCA) not anymore represents the actual economic reality. Consequently, in the moment of increasingly growing material liquidity and ambiguity, a new costing approach is needed to address the weakness of TCA. The goal of the study is to establish a new costing structure using activity based costing (ABC) method to the magnetic inductor for better precision. The case study is located at electronic industry in Pahang, Malaysia. ABC reports on the costs of manufacturing, selling or funding the goods used in the operations. The job was done correctly by the operator to accomplish the entire mission. The maximum time used by operators is at epoxy application activity which is 44.04% and the smallest is 0.64% at oven curing and boundary inspection activity. The highest amount of cost of capacity is epoxy application activity with MYR 1,665,600.00 and the quantity of material utilized is selected as the cost driver. Since the product required volume is up to 10%, production costs are expected to increase by MYR 4,160,614.85 while the unit product cost is forecast at MYR 0.79. Therefore, ABC is an cost management insightful process and cost control efficient approach.

scholarly journals The effectiveness of ABC method in small companies

2019 ◽  
pp. 40-54 ◽  
Author(s):  
Rūta Klimaitienė ◽  
Kristina Rudžionienė ◽  
Andželika Verbliugevičiūtė
Keyword(s):  
Indirect Costs ◽  
Cost Calculation ◽  
Small Companies ◽  
Activity Based Costing ◽  
Product Cost ◽  
Advantages And Disadvantages ◽  
Cost Distribution ◽  
Abc Method ◽  
The Cost ◽  
A Company

Under the current conditions of Economics, in order to keep competition it is necessary to possess not only good economical resources, but also to apply them relevantly in production and this is impossible without good administration in accounting of costs and productions costs. Before the calculation of product cost, first, it is necessary to know which costs and how many of them are included into the indicators of product cost. The validity and objectiveness of the obtained information depend on the preciseness of current cost distribution for the product cost. Scientific problem – it is unclear how ABC method affects the calculation of partial cost in small companies. It is not clear which method of cost calculation is most beneficial to apply for small companies –it is necessary to research how to distribute indirect costs – either applying ABC system (activity based costing - ABC) or using more simple – traditional distribution methods. The object is ABC method. The aim is to research the application efficiency of ABC method in small companies. In the first part there are analysed the pieces of research carried out by foreign authors investigating ABC method. There is executed the research in cost calculation in Lithuanian companies in order to identify if companies apply the following method, what benefit they receive and which difficulties they face. Having completed the analysis there were formulated advantages and disadvantages of the following method. In the second part, following the possessed cost calculation data of the company ‘Baldas’ there is compared the cost of the key company’s products calculated under traditional method and applying ABC method. It was indicated if it is useful for a company to apply ABC method for cost calculation.

scholarly journals Manajemen Biaya untuk Meningkatkan Ketepatan Penghitungan Biaya melalui Biaya Berbasis Aktivitas

2018 ◽  
Vol 7 (2) ◽  
pp. 125
Author(s):  
Agung Listiadi
Keyword(s):  
Cost Driver ◽  
Management Systems ◽  
Activity Based Costing ◽  
High Quality ◽  
Overhead Cost ◽  
Consumption Cost ◽  
Costing System ◽  
Major Factors ◽  
The Cost ◽  
Selection Of

Cost is an important factor in ensuring the company win in the competition on the market. Consumers will choose a manufacturer that is able to produce products and services that have high quality with low prices. Costs of Management Systems Contemporary emphasis on search than the allocation. And management based activities are at the heart of contemporary operating control system. At least two major factors that must be considered in the selection of cost driver (cost driver) are: the cost of measurement and the degree of correlation between the consumption cost driver with the actual overhead. Cost driver is divided into two categories, namely the structural cost driver and executional cost driver. Cost driver is the basis used to charge collected on cost pool to the product. So that the calculation of the cost through Time Driven activity-based costing system, the company obtain more precise information and accurate.

scholarly journals PENERAPAN METODE ACTIVITY BASED COSTING DALAM PENENTUAN HARGA POKOK PRODUKSI PADA PT. SARIMELATI KENCANA (PIZZA HUT MANADO TOWN SQUARE)

2013 ◽  
Vol 8 (3) ◽  
Author(s):  
Stephany Ch. Pelleng ◽  
Herman Karamoy ◽  
Victorina Tirajoh
Keyword(s):  
Quantitative Data ◽  
Cost Driver ◽  
Production Costs ◽  
Activity Based Costing ◽  
Traditional System ◽  
Pricing Process ◽  
Costing System ◽  
The Right ◽  
The Cost ◽  
Pizza Hut

Nowadays, every company has to have a right and efficient way to know their own pricing process. The better the company count it, the better it would be to compete in the market because the right method or system will decrease the cost and increase the profit. Activity Based Costing System is a method of calculating the cost of goods manufactured based on activities in a company using more cost driver, so it can calculate more accurate. This method is expected to be applied to the PT. Sarimelati Kencana who still using the traditional system for calculating the cost of goods manufactured. This research has a purpose to know the cost of goods manufactured in the company using activity based costing system. There are qualitative and quantitative data on this project. Qualitative data for company profile and quantitative data for production costs. This is descriptive research and the result shows that the pricing process using ABC method give overcost condition for pizza hut personal and undercost condition for pizza hut regular and large.

Animal production studies in Jamaica. IV. The costs of developing and maintaining pangola grass pastures

1964 ◽  
Vol 62 (2) ◽  
pp. 179-186 ◽  
Author(s):  
B. L. Nestel
Keyword(s):  
Indirect Cost ◽  
Direct Cost ◽  
Inverse Relationship ◽  
Indirect Costs ◽  
Animal Production ◽  
Direct And Indirect Costs ◽  
Production Studies ◽  
Total Range ◽  
The Cost

The cost of developing and maintaining pangola grass pastures has been examined under a range of conditions. The direct cost of improving pastures to the stage where they were established as 5–10 acre, fenced, watered units of pangola grass was about £30 per acre. Under favourable conditions this cost could be reduced to £20, but with difficult land or poor techniques the cost could rise to £40 or more per acre. In addition to the direct cost of establishment there was an indirect cost due to land being out of use or stock numbers having to be reduced. This indirect cost appeared to be highest on lands where planting costs were least. It was suggested that there might be an inverse relationship between direct and indirect costs which tended to narrow the total range of establishment costs.

ANALISIS BIAYA SATUAN METODE ACTIVITY BASED COSTING DALAM EVALUASI TARIF PELAYANAN KESEHATAN DI ERA JKN (Studi Kasus Pasien Stroke di Rumah Sakit Kristen Mojowarno)

2016 ◽  
Vol 26 (1) ◽  
pp. 79
Author(s):  
. Soewatoen
Keyword(s):  
Unit Cost ◽  
Indirect Costs ◽  
Activity Based Costing ◽  
Labor Costs ◽  
Stroke Patients ◽  
Severe Stroke ◽  
High Care ◽  
Mild Stroke ◽  
Christian Hospital ◽  
The Cost

Mojowarno Christian Hospital is an organization that is move in health services that produce multi-product, theratio of consumption of each product is different and significant indirect costs therefore needed to determine theservice tariff calculation of unit cost in the hospital with Activity Based Costing Method. The purpose of this studywas to determine the calculation of unit costs of care and outcomes of stroke patients fare calculation using theunit cost from Activity Based Costing method hospital compared with rates prevailing at the moment and ratesINA CBGs. This type of research is a qualitative case study. Based on calculations by the method of ActivityBased Costing obtained Unit Cost for Outpatient is Rp. 749.705, Unit Cost for Emergency Care Unit Mild Strokeis Rp 664.093;Medium Stroke Rp. 1.424.683, Severe Stroke Rp. 2.282.755,-. Unit Cost for Room type III MildStroke is Rp. 3.899.786, Medium Stroke Rp. 5.874.646, Severe Stroke Rp. 7.892.496; Unit Cost for Room type IIMild Stroke is Rp. 4.859.510, Medium Stroke Rp. 7.557.913, Severe Stroke Rp. 10.294.306; Unit Cost for Roomtype I Mild Stroke is Rp. 6.097.530, Medium Stroke Rp. 9.728.198, Severe Stroke Rp. 13.391.856; Unit Cost forVIP Room Mild Stroke is Rp. 10.953.150, Medium Stroke Rp. 18.240.533, Severe Stroke Rp. 25.540.906 ; UnitCost for High Care Unit Mild Stroke is Rp. 3.710.121, Medium Stroke Rp. 5.655.278, Severe StrokeRp. 9.477.309 and Unit Cost Intensive Care Unit Mild Stroke is Rp. 7.010.169, Medium Stroke Rp. 10.605.350,Severe Stroke Rp. 17.727.429,-.Each unit cost plus the cost of materials and direct labor costs, it can be seen thatthe cost of treatment of each disease severity have enough material price difference. It is because the higher theseverity of the disease makes the longer the treatment, the more use the service activities, and service facilities, itsmake the cost is higher. The comparison resoult showed that hospital rates prevailing at this time and the resultsof the calculation using the ABC method for stroke patients is higher than the rate of INA CBGs.

scholarly journals Study on Key Cost Drivers of Prefabricated Buildings Based on System Dynamics

2020 ◽  
Vol 2020 ◽  
pp. 1-12
Author(s):  
Na Lou ◽  
Jingjuan Guo
Keyword(s):  
Cost Control ◽  
Rapid Development ◽  
Construction Cost ◽  
Cost Driver ◽  
Systematic Research ◽  
Cost Drivers ◽  
Building Cost ◽  
Cost Constraints ◽  
The Cost ◽  
Prefabricated Building

The prefabricated building as a major initiative has been put forward by China in recent years to promote the transformation and upgrading of the construction industry, but its rapid development also faces high cost constraints. Therefore, it is necessary and urgent to study the key cost drivers and cost control paths of prefabricated buildings. Most of the current research focuses on the construction cost of prefabricated building as a static object. This article, on the other hand, regards the construction cost of prefabricated building as a dynamic formation process and conducts systematic research from product systems, technical systems, construction processes, and management modes. The influence factors of prefabricated building cost are defined and screened with the help of HSM and previous research results. A cause-and-effect model and cost control model of prefabricated building cost driver are established. Based on the model test of the actual project, the cost generation of prefabricated buildings is simulated. Through sensitivity analysis, key cost drivers of prefabricated building are identified and ranked as degree of design standardization, unit price, prefabrication rate, information technology level, transportation mode, labor level, machinery level, transportation distance, etc. Accordingly, corresponding strategies are proposed for the cost control of prefabricated buildings.

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