The document describes an Activity Based Costing (ABC) model called PARAS-Integrated ABC Module. The ABC model identifies activities in an organization and assigns the costs of activity resources to products and services based on actual consumption. It presents an ABC flowchart showing how material pack costs, service costs, and apportioned overhead costs are assigned to services and ultimately to customers. The document explains that hospitals need ABC to understand costs in detail, assign human resource and other complex costs, and improve billing processes.

1. PARAS-Integrated ABC
Module

2. PARAS- Integrated ABC Module
• Activity Based Costing model that identifies activities in an
organization and assigns the cost of each activity resource
to all products and services according to the actual
consumption by each
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3. ABC Flowchart
Services
Material Pack Services/ Activities Apportioned Cost
Electricity cost Human Resource Others
MP 1 MP 2
Service 1 Service 2 Service n
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4. Why Hospital needs Activity Based Costing?
- To know your business in and out
- ABC methodology assigns an organization's resource
costs through activities to the products and services
provided to its customers.
- To know the human resource cost in a hospital
- Since hospital is having so many activities/ services, the
cost associated to each resource is huge and complex.
- The billing process is very complex thus calls for a robust
ABC in place
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5. Activity Based Costing
- You have many services inside a hospital
- Each service can have many services and activities
- The services and activities can be broken down to three
component
- Material Pack
- Service Cost
- Apportioned cost
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6. Material Pack
- Every activity has material pack
- E.g. In lab sample collection: Vials, gauges, syringes etc. are material
pack
- The consumption of the material pack will be updated in real time with
the current stock
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7. Service cost
- Every activity is associated with its service cost
- The service cost is the cost for the resource who is
administering the sample collection activity
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8. Apportioned Cost
- Apportioned cost is the overhead cost shared by a number
of activities/ services.
- The apportioned cost would be resource
remuneration,rent, electricity cost, air conditioned cost etc.
which is associated to manage the activity
- Utilization of resources- 70% of actual time/ effort/cost
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9. ABC usage
- For a smooth functioning and to know the overheads,
hospitals need Activity Based Costing
- The better the ABC usage the better the sustainability
of the hospital
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10. Question/ Feedback?
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11. THANK YOU..!!!
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