Activity Based Costing: Article Analysis Summary

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3.     Article Analysis Summary
Use the Internet or other credible resources to find an article relevant to activity-based costing (ABC), job costing, or process costing. Prepare a 125-word summary of the article. Briefly summarize the major topics of the article, and explain what you learned as a result of your reading. Be sure to properly cite the article in your summary and be prepared to present your summary to the entire class.

Using activity-based costing in surgery
AORN Journal, Jan, 2004 by Cheryl Grandlich

Article “Using activity-based costing in surgery” covers how ABC is used by Froedtert Memorial Lutheran Hospital, Milwaukee, to measure and manage their cost. As we learned from chapter 4, ABC helps identify process improvement areas, as activity base costs looks at overhead cost in details by product or service. One might think how activity-based costing can be used by the hospital, some of the example article highlights are: anesthesia care, electroconvulsive therapy, and several surgical procedures, including total knee replacements and transplantations.

In anesthesia care, ABC was used to calculate actual cost for types of procedure provided by the hospital. Example from the article “Level zero indicates local procedures, and level S indicates regional and spinal procedures.” In electroconvulsive therapy, ABC was used to identify cost of postanesthsia unit and anesthesia department separately for billing usage. In total knee replacements area “Activity-based costing also can be used to identify potential areas for cost savings or actual realized savings after performance improvement projects have been implemented.” In transplation, ABC was used to identify cost related to performing transplant surgery. Article compared two surgeons and results were time taken by each was different due to the age of the surgeon.

I learned from this article that how ABC is used by the hospitals. It can be very useful when insurance companies...
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