Question

What do you think are advantages of having cost centers in terms of reporting in a healthcare organization?

Answer 1

A cost center refers to an expense that is incurred but does not contribute directly to the profit making of an n organization.

i) Cost is ascertained by cost center.

(ii) Helps cost control, providing opportunity for center-wise comparison of cost at different points of time.

(iii) Helps to find out and show the trends in cost variances of each cost center.

(iv) Facilitates cost control by checking and correcting undue, undesirable or unexpected movements in cost.