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For example, a company may have unexpected and unpredictable expenses unrelated to production, such as warehouse costs and the like that are fixed only over the time period of the lease. By definition, there are no fixed costs in the long run, because the long run is a sufficient period of time for all short-run fixed inputs to become variable.
Here’s an example. The ABC Company makes widgets. The company has fixed costs of $10,000 per month. Each widget costs the company $3.00 to make, and it sells each widget for $5.00.
The higher amount paid by certain payers might be intended not only to address below-cost reimbursements, but also the volume of payers and the desired total margin, especially of a for-profit hospital or healthcare organization. When fixed costs rise (i.e. administrative expenses) the willingness of medical facilities to cost cut of possible ...
Overhead costs for a business are the cost of resources used by an organization just to maintain its existence. Overhead costs are usually measured in monetary terms, but non-monetary overhead is possible in the form of time required to accomplish tasks. Examples of overhead costs include: payment of rent on the office space a business occupies
Some costs—such as money needed to market an insurance company, the overhead cost of operating a doctor's office, or expenses associated with training hospital staff—are a regular part of ...
In the United States, a health maintenance organization (HMO) is a medical insurance group that provides health services for a fixed annual fee. [1] It is an organization that provides or arranges managed care for health insurance , self-funded health care benefit plans, individuals, and other entities, acting as a liaison with health care ...
Cost sharing can be audited and must be allowable under cost principles and verifiable to records. Costs may also be divided across activities or projects even if paid for by the same organisation, for example where a charity shares the allocation of its fixed costs between different grants or funding schemes. [4]
In a business organization, the ABC methodology assigns an organization's resource costs through activities to the products and services provided to its customers. ABC is generally used as a tool for understanding product and customer cost and profitability based on the production or performing processes. As such, ABC has predominantly been ...