What are the revenue centers for your organization?
We have cost center services which include: Medical supplies, help desk, customer service, etc.
What types of centers (departments) have budgets?Revenue center has a budget which includes direct revenues and direct expenses. Our supply department hasan annual budget.
How many cost centers are there? Can you give some examples?There are few of them like maintenance, customer service, etc. Also, rent, utilities, executive office, and arevenue center.5.
How important is it to control costs?First of all it is important to stay within allowed budget so controlling the cost is what helps us to ‘’functionproperly’’
How are fixed costs separated from variable costs?Salary costs are fixed and things such as maintenance, supplies and any unexpected charges are variable,
How are variable costs handled?We have a sheet that must be filled out on a weekly basis. That sheet help us to monitor expenses.
What method of cost allocation do you use in your organization (Direct allocation, step-down allocation,double or multiple distribution, or reciprocal)? What are the advantages and disadvantages of using thatparticular method?
We use step-down allocation, we allocate the cost of each cost center based on its previous statistics. Capitalcosts include repairs of equipment, etc., and then employee benefits based on annual salaries. This methodgives us a better picture of how finances are being spend . We believe step-down cost is more “accurate” and ithas been working for us!
How are costs allocated? What are some examples of criterion you use to determine cost allocation?Sometimes we order supplies at a ‘’bundle’’ which will cost less than if supplies were purchased separetly, or weget different products or a combination which may also be used to determine cost allocation. Even internetservices and television (waiting room) can be used as a method to cost allocation.
What happens when a service’s revenues do not cover its costs?
We just get rid of the service because we can’t cover up the expenses to provide the service.