HCA302 UNLV Chapter 6 Cost Allocation LO6.1 Explain why proper cost allocation is important to health services organization. Proper cost allocation is important so that a HCO will know how much to charge for its services. Define the term cost allocation. Cost allocation is essentially an allocation process within the organization.
Managers allocate the cost of one department to other departments.
LO6.3 Explain the purpose of cost allocation. The purpose of cost allocation is to accurately determine the cost of goods and services so that they can be properly priced. LO6.4 Explain why cost allocation is important. Without cost allocation it would be impossible to make good decisions about pricing. LO6.5 Trace the evolution of cost accounting systems among health care providers.