Explain or assit me in why or which accounting costs fixed, variable or semi-variable costs can...

Explain or assit me in why or which accounting costs fixed, variable or semi-variable costs can be challenging to measure and why in a healthcare enviroerment?

Expert Solution

Semi variable cost is very challenging to measure.

Variable cost is directly attributable to production units; therefore, this is the easiest to calculate; like medicine cost per patient is $45, if there are 80,000 patients then the total variable cost would be ($45 × 80,000 =) $3,600,000; in this way direct nursing cost also could be calculated.

Fixed cost is constant during a period and there should not be any complication finding those costs; examples are rent of a hospital building, salary of office staff, etc.

The main problem is to find semi-variable cost. This is the aggregate of partly-fixed and partly-variable in one item of cost, like supervision cost. Getting the right figures and making such hard calculation may be difficult.

Example: Suppose there are 500 patient-beds in a hospital; supervisors are appointed there. Each supervisor will get $1,000 (fixed) for supervising up to 100 beds (it means he will get $1,000 for supervising from 0 to 100 beds), beyond which each supervisor will get $10 (variable) for each additional supervision. A supervisor also does some other healthcare works for which his payments are due and at the end of month he is being paid in aggregate. Now segregating the fixed part and variable part out of that total payment is challenging by an accountant.

ekkarill92 answered 1 year ago

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