Cost Information and Decision Making
Q 1: 10 marks For what decisions would estimated cost information be useful if you were a hospital administrator?
The Director of a Cinema hall? The Marketing vice president of a bank?
Cost information is the information about the different costs that are incurred in the operation of the organization or a business process. Here the cost includes all cost like material cost, labor costs, and all other overhead costs that are incurred depending on the type of business they operates. The main objectives of cost information are:
1) To ascertain the cost per unit for different products.
2) To have correct analysis about the cost incurred.
3) To disclose source of wastage whether material, time or expenses.
4) To provide requisite data and serve as a guide to price fixing.
5) To reveal the source of economy.
6) To help in preparation of budget.
7) To organize internal audit system to ensure effective working.
HOSPITAL ADMINISTRATOR:
In hospital, different costs are involved such as on purchase of different kinds of medicines, equipments, antibiotics, etc and for employing different people where they are needed to pay salaries and wages etc. they should also incur transportation cost and other overhead costs for the operation of day to day operations.
They should ascertain the cost incurred on the medicines, salaries and wages to the staff and employees, and to know total units consumed during certain period of time, how many people are employed and their effectiveness in their work.
So by having cost information, it helps the hospital administrator in making
The Director of a Cinema hall? The Marketing vice president of a bank?
Cost information is the information about the different costs that are incurred in the operation of the organization or a business process. Here the cost includes all cost like material cost, labor costs, and all other overhead costs that are incurred depending on the type of business they operates. The main objectives of cost information are:
1) To ascertain the cost per unit for different products.
2) To have correct analysis about the cost incurred.
3) To disclose source of wastage whether material, time or expenses.
4) To provide requisite data and serve as a guide to price fixing.
5) To reveal the source of economy.
6) To help in preparation of budget.
7) To organize internal audit system to ensure effective working.
HOSPITAL ADMINISTRATOR:
In hospital, different costs are involved such as on purchase of different kinds of medicines, equipments, antibiotics, etc and for employing different people where they are needed to pay salaries and wages etc. they should also incur transportation cost and other overhead costs for the operation of day to day operations.
They should ascertain the cost incurred on the medicines, salaries and wages to the staff and employees, and to know total units consumed during certain period of time, how many people are employed and their effectiveness in their work.
So by having cost information, it helps the hospital administrator in making