Activity-Based Analysis

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Activity-Based Analysis

Businesses find it difficult to makes decisions on pricing their products or services. It is a critical decision that can either make or break the business. High price ensures growth of the company with a decent profit margin, but the price need to be competitive to get customers. Therefore, for this balance to be achieved and maintained businesses apply the activity-based costing method that enable them to price their offerings accurately (CGMA, 2013). The increasing healthcare costs and ongoing industry’s transition towards value-based payment environment prompts care providers to adopt an effective managerial costing technique. According to results of a recent survey carried out by Healthcare Financial Management Association (HFMA) regarding the costing practices in healthcare organizations, many hospitals and care providers are using the activity-based costing techniques to manage their costing (Lawson, 2017)