Unbundling the Cost of Hospitalization - Essay Example

Moreover, it was proof of how an initiative can change perspective on a micro level, and why not to the overall medical system. Such initiatives are welcomed, and it must be remembered that the success of the project is a factor of the implication of people involved.

5.3. Activity-based costing for marketing

Summary

Nowadays, important issues when considering cost accounting are the physical distribution activities and other marketing functions. A solution to this issue is activity-based costing (ABC) for marketing.

The main outcome of this technique is to help marketing managers in their decision-making process related to profitability, pricing, and distribution areas. The most important marketing activities considered are selling, warehousing, packing and shipping, and administrative.

Learning outcome

This article provided a clear distinction on the importance of marketing costs, and the ways these are assessed. Because recent years were characterized by advancement in marketing, and also on the costs related to this, I think it is necessary to consider the ABC technique for a manager to make the best decisions for the company he is running.

6.1. Distribution channel for profitability

Summary

To assess the quality of distribution channels, an ABC analysis can be used. The advantage of this technique over the standard approach to channel profitability is the fact that it is estimating cost more accurately, which is very important for a company to decide where it is selling its products. However, ABC has also the main disadvantage which is related to its assumption that all costs are product-driven so it should be allocated to products.

Another approach is the strategic cost management approach, which extends the assumption of ABC to consider also that costs are driven by the customers and by the distribution channels. Although this technique has various advantages, in practice the traditional ABC technique is preferred.

 Learning outcome

This paper addressed the most important techniques of assessing costs for the management to take make appropriate decisions. In my opinion, the technique used in assessing costs depends more of ton specific company and its competitive environment because different features of the company may require different valuation techniques.