Expenses are the costs that relate to the earnings of revenue. Another way to think of expenses is as the cost of doing business. Just as revenues represent the inflow into the organization, so do expenses represent the outflow- a stream of expenditures flowing out of the organization.
Direct cost can be specifically associated with a particular unit or department or patient. The critical distinction for the manager is that the cost is directly attributable. Remember direct cost can be traced. Indirect cost, on the other hand, cannot be specifically associated with a particular cost object.
· Complete Practice Exercise 5–1: Grouping Expenses by Cost Center
· Complete Practice Exercise 6–1: Identifying Direct and Indirect Costs
Revenue represents amounts earned by an organization: that is, actual or expected cash inflows due to the organization’s major business. In the case of health care, revenue is mostly earned by rendering services to patients. Revenue flows into the organization is sometimes referred to as the revenue stream.
· Review the following key terms: (Students may see the key terms on a quiz)
What do you believe the proportion of revenues from different sources is for your current health care organization?
Do you believe that this proportion (payer mix) will change in the future? Why?
Please make your initial post by Wednesday! You will need to reply to at least two classmates by Sunday. You initial post must contain at least 200 words. In your replies to your classmates you will need at least 100 words.