Importance of Cost Classification

Analysis of cost behaviour is significant to all organizations for effective management. It is since many organizations have a unique cost structure. As an example like, fixed costs account for 60 percent - 80 percent of all hospital costs. Conversely, unlike many organizations of this variety, labour costs largely involve the hospital's fixed costs.

Labour costs not like depreciation need a cash outflow. It is characteristic of labour intensive organizations. On the other hand Capital-intensive organizations, contain low labour costs, as an example like: computerized manufacturing organizations. Some organizations as an example like: hospitals allocate 10 -15 percent of their space for standby emergency events providing them built in idle capacity. This prevents them from enjoying benefits of higher profits such a capital-intensive organization understands at higher volumes beyond the break-even volume. Hence the cost structure of healthcare institutions presents challenges to accountants since of their labour intensive and capital-intensive characteristics.

Posted Date: 2/5/2013 2:45:41 AM | Location : United States

Ask an Expert

Related Discussions:- Importance of cost classification, Assignment Help, Ask Question on Importance of cost classification, Get Answer, Expert's Help, Importance of cost classification Discussions

Write discussion on Importance of cost classification
Your posts are moderated

Write your message here..

Related Questions

Show the objective of accounting standards, A sound foundation is necessary... A sound foundation is necessary for success in any task from building a house to putting on make up. In terms of U.S Accounting standards it is necessary to have a sound foundatio

Relationship between cost accounting and business enterprise, Relationship ... Relationship between Cost Accounting and Business Enterprise Cost accounting, like will be mentioned later to adopts a cost center approach to accounting for costs. A cost cen

Marginal costing, The profit volume ratio of xltd. is 50% and the margin of... The profit volume ratio of xltd. is 50% and the margin of safety is 40%.you are required to calculate the net profit if sales volume is rs.100,000?

Week 2 Assignment, Please complete the following 7 exercises below in eithe... Please complete the following 7 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculation

Calculate the cash flow - capital cost, A company is evaluating the followi... A company is evaluating the following lease or buy option.  A four year lease with annual payments of $25,000 payable at the beginning of the year. The tax shield is available a

Calculate the bad debt estimation, Q. 1. The 31st December 2009 trial balan... Q. 1. The 31st December 2009 trial balance of Anika Co. reported the following information. Dr. Cr. Allowance for Bad Debts........................... $1,300 During the year 201

Classification of cost accounting, importance of classifying cost accountin... importance of classifying cost accounting

Measuring performance in organization, list and discus the problem encounte... list and discus the problem encountered in adopting profit as a yardstick in measuring performance

Relevant costs and decision-making, Relevant Costs and Decision-Making ... Relevant Costs and Decision-Making The relevance of costs will depend upon the purpose for that they are being utilized. Relevance is related to future decisions. The relevanc

Stock control and its level, Stock control and its Level Management m... Stock control and its Level Management must formulate decisions regarding to the control of stock levels along with a view to minimizing the cost of the company whereas achie