Fixed and Variable Costs

Cost behavior is the term used to summarize the impact of costs that are influenced by volume. On a financial statement, these costs are identified as variable costs. Understanding the role of both fixed and variable costs in a health care organization is key to targeting profitability centers.

Assume the role of a financial consultant. You have been hired by a small non-profit hospital, struggling with profitability. You have been given full access to all financial and operational information to perform your research and analysis.

• Create a one-page outline of the work you will be performing. This outline will be given to the CFO.
• On a separate page, using fictional information, depict the hospital's cost behavior.
  • You may include graphics, such as pie charts or graphs, to illustrate.
  • Cost drivers should be clearly defined
  • One-page in length
• On a separate page, provide a recommendation summary for the CFO. This should include specific areas of concern to address, as well as areas of strength to continue supporting. Your wording should be professional and concise.
• Include a minimum of three references in APA style on a separate page
• Submit all four pages as part of one Word document