Allocation of Costs Using ABC

Allocation of costs using ABC and Transitional costing accounting

Allocation of Costs at Jumper Hospital Takes a New Approach

As part of the Jumper Hospital Administrative Coordinator, our committee came together last week for our annually meeting for the fiscal year 2010 to determine that even though we understand the history of a traditional cost, and it has always been our way of handling and determining the allocation of costs to our departmental cost approach we are considering a transformation in to the Activity-Based Costing perspective (WiseGeek, 2011). We, The Committee, feel, after looking at the transitional and ABC approach by conducting two simple diagrams that compares the effectiveness of the accounting system we want to offer to you in this obvious and through explanation in these comparisons.

We used three main parts as part of the ABC method and could only put two of them in place within the transitional model with the example of Resources at the top of both which is used to describe as everything inside the organization which is Jumper Hospital as a whole (all the different departments in relation to the maintenance department. While the resources are everything within the organization the different approaches classify what is considered there and in the activity approach, this is the hospital as a whole and routine repairs needed in each department and in the pharmacy, and then we look at what is used in the repairs in maintenance, how it effects consumers, patients, and staff which lead up the resource development that the research box represents. In the other cost accounting, the resources traditionally include considering be considered in reducing cost and increasing overall revenue and if the services provided should be eliminated. The next box we label in the diagram below the resources box is the activity box in the new approach we are considering and the fact there is no activities listed in the traditional diagram, and the activities in the ABC method is what is actually being done at Jumper. The notes in the around the Activity box are actions needing fixed at the present time such as detecting allocation and costs and most importantly the priorities of the hospital's maintenance.