Applying the ABCs in provider organizations
Pandey, S.
Healthcare Financial Management Journal of the Healthcare Financial Management Association 66(11): 112-116; 118, 120
2012
ISSN/ISBN: 0735-0732 PMID: 23173369 Document Number: 656985
Activity-based costing (ABC) is an accounting technique designed to guard against potentially serious financial problems that can arise when an organization's accounting costs deviate significantly from its actual costs. In general, an ABC analysis considers two factors: a cost element (a directly measurable unit of cost, such as the cost of an item) and a cost driver (a directly measurable feature of the service, such as how often the item is used). ABC is best applied to specific service areas, orservice packages, for which consumption of resources is largely predictable and atomic units of services can be accurately identified.