Thông tin tài liệu
Essentials of
Cost
Accounting
for
HEALTH CARE ORGANIZATIONS
Third Edition
STEVEN A. FINKLER, PhD, CPA
Program in Health Policy and Management
Robert F. Wagner Graduate School of Public Service
New York University
New York, New York
DAVID M. WARD, PhD
College of Health Professions
University of New England
Biddeford, Maine
JUDITH J. BAKER, PhD, CPA
The Resource Group
Dallas, Texas
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Library of Congress Cataloging-in-Publication Data
Finkler, Steven A.
Essentials of cost accounting for health care organizations / Steven A. Finkler, David M. Ward, Judith J. Baker.
— 3rd ed.
p. ; cm.
Includes bibliographical references and index.
ISBN-13: 978-0-7637-3813-6
ISBN-10: 0-7637-3813-1
1. Health facilities—Costs—Accounting. 2. Hospitals—Cost of operation—Accounting. 3. Cost accounting.
I. Ward, David M. (David Marc), 1964- II. Baker, Judith J. III. Title.
[DNLM: 1. Costs and Cost Analysis. 2. Health Facilities—economics. 3. Accounting—methods. 4. Econom-
ics, Hospital. WX 157 F499e 2007]
HF5686.H7F563 2007
657’.8322042—dc22
2006028724
6048
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Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xiii
About the Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xvii
PART I COST ACCOUNTING FOUNDATIONS . . . . . . . . . . . . . . . . . . .1
C
HAPTER 1
Introduction to Cost Accounting . . . . . . . . . . . . . . . . . . . . . . . . . .3
The Purpose of Cost Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Costs for Reporting vs. Costs for Management Planning and Control . . . . . .7
Good Cost Accounting Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
The Human Element in Cost Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
CHAPTER 2 Cost Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Definition and Characteristics of Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Cross-Subsidization of Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
True Cost, Economic Cost, and Accounting Cost . . . . . . . . . . . . . . . . . . . . .21
The Long Term vs. the Short Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Departmental vs. Product-Line Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
External Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
CHAPTER 3 Product Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
The Need for Product Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Job-Order and Process Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Process Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
Job-Order Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
v
Contents
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Hybrid Approaches to Product Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Standard Costing Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Microcosting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
Product Costing and Computers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
CHAPTER 4 Cost Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
What Is Cost Allocation? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Determining Overhead Application Rates . . . . . . . . . . . . . . . . . . . . . . . . . . .52
Cost Allocation and Motivation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
Allocating Joint Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
Traditional Cost Allocation for Health Care Organizations . . . . . . . . . . . . . .66
Is Good-Enough Cost Finding Good Enough? . . . . . . . . . . . . . . . . . . . . . . . .76
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80
CHAPTER 5 Costing for Nonroutine Decisions . . . . . . . . . . . . . . . . . . . . . . . .83
Cost Information for Nonroutine Decisions . . . . . . . . . . . . . . . . . . . . . . . . . .84
Sunk Costs Are Irrelevant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
The Role of Volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86
Terminology for Relevant Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88
Examples of Nonroutine Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88
Cost-Benefit and Cost-Effectiveness Analysis . . . . . . . . . . . . . . . . . . . . . . . .92
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94
Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95
CHAPTER 6 Cost-Volume-Profit Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . .97
The Cost-Volume-Profit Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .98
Breakeven Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100
Caveats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107
Mixed Costs and Step-Fixed Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111
Using Breakeven Analysis for Decision Making . . . . . . . . . . . . . . . . . . . . .112
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113
Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .114
vi CONTENTS
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PART II COST ACCOUNTING INFORMATION FOR
PLANNING AND CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . .117
C
HAPTER 7
Predicting Future Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .119
Using Groups for Estimating Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .121
Indexing for Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .122
Cost Estimation Using Linear Regression . . . . . . . . . . . . . . . . . . . . . . . . . .125
Forecasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .136
Learning Curves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .150
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .155
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .155
Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .156
Case Study—Part 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .157
CHAPTER 8 Budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .159
The Role of Budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .160
Budgeting Philosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .162
The Master Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .163
The Long-Range Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .164
The Operating Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .165
The Cash Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .167
Program Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .175
The Capital Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .175
Special-Purpose Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .187
The Negotiation and Approval Process . . . . . . . . . . . . . . . . . . . . . . . . . . . .187
Flexible Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .188
Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .188
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .188
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .189
Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .189
Case Study—Part 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .191
Appendix 8–A: Present Value and Compound Interest Tables . . . . . . . . . . .193
CHAPTER 9 Flexible Budgeting and Variance Analysis . . . . . . . . . . . . . . . .199
Traditional Variance Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .201
Flexible Budget Variance Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .203
Calculation of Variances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .210
Variance Analysis and Management Control . . . . . . . . . . . . . . . . . . . . . . . .214
Revenue Variances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .218
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .225
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .225
CONTENTS vii
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Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .225
Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .226
Case Study—Part 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .227
CHAPTER 10 Management Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .229
Is Management Control a Science? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .230
Responsibility Centers for Management Control . . . . . . . . . . . . . . . . . . . . .231
The Management Control Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .233
Key Variables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .235
Internal Control Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .237
Transfer Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .242
Management Control of Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .242
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .250
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .250
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .251
Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .251
PART III ADDITIONAL COST ACCOUNTING TOOLS TO
AID IN DECISION MAKING . . . . . . . . . . . . . . . . . . . . . . . . . .253
C
HAPTER 11
Cost Accounting Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .255
Financial Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .256
Development of a New Set of Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .257
Some Cost Accounting Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .258
Comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .260
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .262
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .262
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .262
Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .263
CHAPTER 12 Measuring Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .265
Productivity Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .266
The Traditional Approach to Measuring Productivity . . . . . . . . . . . . . . . . .266
The Total Productivity Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .267
The Partial Productivity Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .268
Productivity and Indirect Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .270
Managing Discretionary Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .273
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .280
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .280
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .281
Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .281
viii CONTENTS
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CHAPTER 13 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .283
Inventory Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .284
Minimization of Inventory Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .291
Inventory Issues Related to Health Care Manufacturing . . . . . . . . . . . . . . .303
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .303
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .303
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .303
Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .304
CHAPTER 14 Dealing with Uncertainty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .305
Uncertainty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .306
The Expected Value Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .306
Simulation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .313
Network Cost Budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .319
Linear Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .326
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .331
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .331
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .332
Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .332
CHAPTER 15 Information Systems for Costing . . . . . . . . . . . . . . . . . . . . . . . .335
Considerations in Designing Costing Systems . . . . . . . . . . . . . . . . . . . . . . .336
The Risks of Do-It-Yourself Computing . . . . . . . . . . . . . . . . . . . . . . . . . . .338
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .342
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .343
CHAPTER 16 Performance Evaluation and Incentive Compensation . . . . .345
Responsibility Centers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .346
Evaluating Investment Centers and Their Managers . . . . . . . . . . . . . . . . . .349
Creating Compensation Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .353
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .358
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .358
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .358
Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .359
PART IV COST ACCOUNTING FOR THE FUTURE . . . . . . . . . . . . .361
C
HAPTER 17
New Approaches to Cost Accounting . . . . . . . . . . . . . . . . . . . .363
Is There a Problem with Traditional Cost Accounting? . . . . . . . . . . . . . . . .364
Kaplan’s Four-Stage Cost Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .365
An Alternative: New Generally Accepted Accounting Principles
for One Unified System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .367
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The Japanese Alternative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .369
Dashboards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .370
Balanced Scorecards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .371
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .372
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .373
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .373
CHAPTER 18 Activity-Based Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .375
What is ABC? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .376
Why Use ABC? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .378
Two Approaches to ABC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .378
Tracing vs. Allocating in ABC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .378
ABC Allocation Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .379
What Should Be Allocated in ABC? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .380
An ABC Example in the Pharmacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .381
Designing and Documenting an ABC Project . . . . . . . . . . . . . . . . . . . . . . .386
Commencing an ABC Project in the Day Surgery . . . . . . . . . . . . . . . . . . . .387
Another Approach to ABC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .389
The Activity-Based Management Concept . . . . . . . . . . . . . . . . . . . . . . . . . .390
Does ABC Make Sense for Health Care Organizations? . . . . . . . . . . . . . . .391
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .392
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .392
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .392
Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .393
Chapter 19 Total Cost Management: Measuring the Costs of Quality . . .395
Cost Accounting and Quality Management . . . . . . . . . . . . . . . . . . . . . . . . .396
An Introduction to TQM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .397
A Focus on Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .399
A Focus on Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .400
Total Cost Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .401
The Quality of Cost Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .416
A Focus on Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .419
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .419
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .420
Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .420
Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .421
Chapter 20 Summary and Issues for the Future . . . . . . . . . . . . . . . . . . . . .423
Cost Accounting Foundations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .424
Cost Accounting Information for Planning and Control . . . . . . . . . . . . . . .427
Additional Cost Accounting Tools to Aid in Decision Making . . . . . . . . . .429
Cost Accounting for the Year 2010 and Beyond . . . . . . . . . . . . . . . . . . . . .431
Additional Future Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .433
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[...]... deal of attention to determining the cost of work-in-process and by-products However, cost accounting texts written expressly for health care are scarce This book thoroughly covers the essentials of cost accounting from a health care perspective, including all of the basic tools of cost accounting common to all industries, using health care examples Essentials of Cost Accounting for Health Care Organizations, ... of the book is the generation of useful cost information to aid managers in making decisions The contents are therefore oriented toward both current and future accountants who will generate the information, as well as all current and future health care managers who want to know the types of information potentially available Essentials of Cost Accounting for Health Care Organizations does not rely heavily... the use of cost accounting for planning and control Part III provides additional cost accounting tools to aid in decision making, and Part IV discusses the latest trends and techniques in cost accounting Part I provides the reader with a solid base in the essentials of cost accounting The chapters in this section introduce costing and cost definitions Various approaches to product costing and cost allocation... and Bartlett Publishers NOT FOR SALE OR DISTRIBUTION 38131_FMxx_Finkler.qxd 2/7/07 2:28 PM Page xiii © Jones and Bartlett Publishers NOT FOR SALE OR DISTRIBUTION Preface Cost accounting is an essential part of health care management As managed care has taken hold, all health care organizations have increased their focus on the measurement and control of costs All health care managers, not just accountants,... techniques for making nonroutine decisions A primary focus of cost accounting is on developing information that managers can use for planning and control Once the reader is familiar with the foundations of cost accounting provided in Part I, Part II presents a number of specific tools for improved planning and control The chapters in this section focus on forecasting and predicting future costs, budgeting,... control Part III addresses a number of additional cost accounting tools that can be helpful in generating management information for decision making Specifically, there are chapters on cost accounting ratios, productivity measurement, inventory, uncertainty, information systems, and performance evaluation For the past several decades, literature critical of current cost accounting practices throughout... becoming more and more aware of the importance of understanding as much about costs as they possibly can A number of textbooks are available in the cost accounting field However, these generic cost accounting texts focus primarily on manufacturing industries and only secondarily on service industries such as health care Their emphasis is therefore largely on the process of converting raw materials into... is that costing has evolved primarily into a tool for external reporting of financial results rather than for managing the organization This concern has led to a movement to revise cost accounting practices drastically to make them more relevant The criticisms of cost accounting and a number of suggested approaches for improvement are discussed in Part IV A new chapter about activity-based costing... trend of the health care industry, moving away from a dominant focus on hospitals The concepts and examples used in the text address not only hospitals but also nursing homes, physician practices, managed care organizations, clinics, surgicenters, and a wide range of other types of health care organizations xiii 38131_FMxx_Finkler.qxd 2/7/07 2:28 PM Page xiv © Jones and Bartlett Publishers NOT FOR SALE... focuses on costing issues and concepts unique to the health care field The tools covered are all practical, although not all are commonly used Some approaches, such as learning curves, are commonly used in other industries but not in health care It is our hope that readers will see the value of some of these less frequently used techniques and adopt them for use in their organizations The main theme of the . essentials of cost accounting from a health care perspective, in-
cluding all of the basic tools of cost accounting common to all industries, using health care. examples.
Essentials of Cost Accounting for Health Care Organizations, Third Edition, focuses on costing issues
and concepts unique to the health care field.
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