Discuss about the variable costs and direct costs

Reference no: EM132200557

On two different paragraphs give your opinion to Ryan Stuck and Mercedes Whitted

Ryan Stuck

Direct costs are costs directly tied to a product or service that a company produces. Direct costs can be traced to their cost objects. Cost objects can include goods, services, departments, or projects. Variable costs are costs that vary as production of a product or service increases or decreases.

Unlike direct costs, variable costs depend on the company's production volume. When a company's production output level increases, variable costs increase. With variable costs, the total cost associated with the cost object changes as the production level changes.

As a healthcare manager, it would be important to consider your census. This would be a variable cost. You do not need as many supplies such dietary supplies if you are feeding fewer people due to census being down. This would also go along with healthcare supplies and staffing budgets. A direct cost would be you still a chef no matter how many people are eating this would not be a variable.

Reference

Oortwijn, W., Sampietro-Colom, L., & Habens, F. (2017). Developments in Value Frameworks to Inform the Allocation of Healthcare Resources. International Journal Of Technology Assessment In Health Care, 33(2), 323-329.

Mercedes Whitted

Direct cost-is the complete price for a good or service (Kenton, 2003). Variable cost-is a corporate expense that change based in production output (Kenton, 2003).

As a healthcare manager it is important to have a list of all the direct cost items and a list of the all the variable cost items. On a monthly base it is a good idea to check the cost of all the items on the variable cost list to verify if the monthly budget can cover the expense.

Mercedes Whitted

References

Kenton, W. (2003, November 25). Direct Cost.

Reference no: EM132200557

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