In healthcare, finding cost driver information (also called statistics) for the basis of an allocation for many overhead departments is readily available through preparation of the Medicare Cost Report. The Medicare Cost report is compiled annually and required by the CMS for all facilities serving Medicare patients. In non-healthcare organization, cost driver information is not always available. On page 366 there is an illustration of how to determine cost drivers and allocation methods. However this process, takes time on both the cost accountant and the operational supervisors and in real life, time is money. Updating the cost driver information is equally essential to maintain the accuracy and validity of an ABC system.

Can you address the following issues:

a) How would you approach finding cost driver information that is readily available and current?

b) In view of the previous discussion Bucket of Overhead, what argument can you provide to convince operational managers to take the time to build and maintain cost driver information. Is there ways that the cost accountant can assist to reduce their time involvement?

c) Updating information is vital to keeping cost results timely. Identify a process or method that you may use to keep cost driver information and volume accurate. Keep in mind the cost-benefit rule.

Please help