Prior to beginning work on this discussion forum,

• Read Chapters 14, 15, and 17 from the course textbook, Essentials of Health Care Finance.
• Read the article Survey: Many Healthcare Organizations ‘Moderately Effective’ In Cost Data UseLinks to an external site..

Cost information is an important part of the financial system of a healthcare organization. As Cleverley and Cleverley (2018) explain,

Cost information is produced through an entity’s cost accounting system. In most situations, cost information is shaped by the financial accounting system and the generally accepted principles of financial accounting on which financial accounting is based. However, cost information must be flexible, because it usually provides information for identifiable and specific decision-making groups, such as budgetary cost variance reports to department managers, cost reports to third-party payers, and forecasted project cost reports to planning agencies. (p. 336)

Additionally, various concepts of cost need to be considered for different decision-making purposes.

In your initial post,

• Discuss the four major categories of cost as they relate to
  • traceability to the object being costed.
  • behavior of cost to output or activity.
  • management responsibility for control.
  • future cost versus historical cost.
• Describe the three basic questions that must be addressed before effective cost accounting systems for healthcare organizations can become a reality.
• Define the two possible theories that may be used to detect out-of-control costs.

Guidelines:

• Your main post must be a minimum of 500 words.
• Cite sources, if necessary, using APA style.
• Refer to APA StyleLinks to an external site. for citing within your paper and formatting your references list.
• Use your textbook or other sources as needed.