Healthcare financial managers use financial resources and cost classifications
to allocateindirectcosts to direct costs when determining patientcharges. This
is achieved using cost accounting methods. Cost accounting methods involve
estimating and classifying costs incurred organization, and crucial by an is a
process needed for organizational success (Carroll & Lord, 2016). The five
most common cost accounting techniques seen in the healthcare environment
include traditional costing, activity based costing, time-driven activity based
costing, performance-focused activity based costing, and the ratio costs of to
charges(Carroll & Lord, 2016).For thepurpose of this discussion postI will be
discussing traditional costing and Performance-focused activity based costing
(PFABC).
“Traditional Costing cost accounting methodology that allocates is a
organizational overhead specific output based predetermined cost to a on a
driver using pre-determined percentage (Carroll Lord, 2016). or by a rate” &
This method widely used and accepted, however unrealistically depicts is a
product or service’s truecost (Carroll &Lord, 2016).
Performance-focused activity based costing (PFABC) value-based (AKA
