Essay on Cost Volume Profit Analysis and Costing for the 21st Century

A challenge that the healthcare nation is facing is to provide the quality of care that is expected and obtain low healthcare cost. Working hand in hand with the private sector and government is in hopes of improving the quality of care that each patient deserves and maintaining the cost so that research can continue. The purpose of this paper is to look into relationships between healthcare cost and quality healthcare.

When referring to health care economics, “cost” refers to the funds that are used to deliver health care to patients. Cost can also mean the amount of funds used to access health care or to deliver health care (Getzen, 2007). It is applied in many different ways such as, health care professionals applying economic principles like cost benefit analysis, or cost effect analysis to determine if the choice is good or bad. The principles help the government to provide the best intervention in health care (Getzen, 2007).

The common cost allocation methods which are used most often by health care organizations are the direct and the step- down methods. These methods are commonly used to help determine the costs of the services provided by the health care organizations. It is important to these agencies to know the costs of operation for each department. They can make smart business decisions on whether they can make investments, determine which department is making a profit or losing one, make improvements where necessary and have a sense of foundation for the future. There are other common cost allocation methods for patients-level costs, such as relative value units (RVU), ratio of cost to charges (RCC) and activity based costing (ABC) which gives us

Assume that some of the costs are simply not knowable, by anyone, however skilled they are, at the time if the analysis. A good example is the cost of adapting PRIDE software to changes in healthcare law. Did you include any such costs in

The cost-effectiveness analysis is a method used to examine in contrast the costs and results of two or more interventions with the same objective. The cost-effectiveness analysis is beneficial for correlating responses when dealing with or discussing similar health issues in a natural unit such as deaths, sickness, prevention of burns, and the monetary costs of these interventions.

In health care, every decision should be examined well so that everybody could benefit from it especially the ones who really need it. For example in the Philippines, it is very apparent that the health care provided by the government to the poor is not well distributed and not that affordable. Seeking quality medical attention especially to an average earning Filipino can be expensive despite the government’s attempt to lower it. So I think the government should allot more budget or make some changes in order to improve the quality of care given to the poor people. It may be costly but in the long run the government can and will be able to see and reap the benefits drawn by the change in health care. Moreover, not only we should use the cost benefit method in evaluating a program but we can also use the cost effectiveness and cost utility analysis so that we can ensure the things that we are doing is suitable to the needs of the

Cost accounting is a type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step of production as well as fixed costs such as depreciation of capital equipment. Cost accounting will first measure and record these costs individually, then compare input results to output or actual results to aid company management in measuring financial performance (Cost Accounting, n.d.).

Cost-benefit, cost-effectiveness and cost-utility analyses are forms of economic evaluation which are useful in health economics for comparing costs and allocating resources. Health economics is widely relevant to governments and the health sector in implementation of new policy, as it concerns the allocation of resources in the context of a limited budget, or 'scarcity'. Economic evaluation is a potential tool for setting priorities in health, though it is only one of many potential criteria, including overall budget and public attitudes and wants. Economic evaluation is already in use in some settings, such as in pharmaceutical company proposals for government subsidisation, but there is room for expansion across the field of

According to Wikipedia, Cost-Benefit Analysis “… is a systematic process for calculating and comparing the benefits and costs of a project, decision or policy.” The main objective is to justify investments, and to provide a basis for projects comparison and analysis.

Based on the real world functioning of businesses, every organization that deals with the process of manufacturing of certain products operates in accordance with the main principle of maximizing its profits. During the performance of daily activities, many business managers face a series of questions related to planning, control and decision making. In order to give answers to all these questions, an additional analysis needs to be considered. It is very important for managers to plan carefully how they are going to generate sufficient money to pay down costs and, in this way to result with a profit. As managers are interested in having the adequate information about the influence that certain actions might have on the profitability of the business, "Cost Volume and Profit" analysis plays a significant role by being a potential tool in facilitating the process of making the right decisions regarding planning and control in order to add value to the company. (Trifan and Anton, 2011). To further illustrate the essential impact that CVP analysis has on management authorities in making better decisions, I will refer to and analyze the case of the Hampshire Company which follows as below.

Cost management has been playing a vital role in the modern days. The company has to adapt to a good costing system to run the business most efficiently & effectively. If there is lack of effective cost control techniques in an organization it gives rise to number of problems such as lack of effective decision making, difficulty in price determination, ineffective utilization of resources, lack of proper cost control etc., this affects all the interested groups, such as the company itself, shareholders, creditors, employees, public etc. So, understanding the cost will give lot of advantages like fixing product price, fixing margin, fixing profitable product mix & various management

Cost volume profit (CVP) analysis and costing for the 21st century has evolved into a very complex and difficult paradigm. Even the most gifted accountants find that grasping the entire concept of accounting for a corporation can be very mind-boggling and difficult. Yet, understanding such a fundamental principle can allow corporations to grow in ways that other, less educated, corporations can never dream to achieve and simultaneously understand the ‘bottom-line’. In this paper we will discuss value costing in the 21st century, other relevant costing methods, and the relevancy of CVP in today’s workplace.

CVP Analysis is a method of examining the relationship between changes in activity (i.e. output) and changes in total sales revenue, expenses and

The last part of this report will focus into the company’s profit and how it can be predicted in relation to the changes in volume, costs and prices. It will look into the Cost Volume Profit analysis to do so in regards to the company selling multiple products. The report will conclude with the assumptions of CVP analysis.

Cost Accounting Reporting System deals with the process of tracking, measuring, recording and classifying the appropriate allocation of expenditure (financial and non-financial) for the determination of the cost of product or service in an organization and for the presentation of suitably arranged data for the purpose of control and guidance of management (Horngren et al, 2010). Costs are measured in terms of Direct Costs, Indirect Costs and Overhead/Absorbed Costs. Managers use cost accounting to support decision making to reduce a company's costs of products and services and improve its profitability.