HS440 Unit 3 Discussion

 

Direct and Variable Costs

The following Discussion will help you to prepare for the part of your Unit 5 Midterm Exam.

Describe the difference between direct costs and variable costs. Consider how a healthcare manager might use this information in making decisions. How might you, as a healthcare manager use the cost allocation method to assign costs to support activities to patient services?

 

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SMART ANSWER

Hey Class!

Direct cost relates to products and services that are directly related to a company’s production. For example, a company has a fixed number of employees because they output services within a specific range that is constant. Direct costs are mainly applied to scenarios where the output of a facility is consistent with what is needed on the input side to keep things running smoothly.