Comparing the Cost of Services Provided by Oncology Ward Using Traditional Costing and Activity-Based Costing (A Case Study: Tohid Hospital of Kurdistan)

Due to rising costs and resources constraints, it is required to consider all activities and costs for calculating the cost of services provided, particularly in hospitals. Since precise identification of costs can result in accurate pricing of provided services. It is an applied and retrospective study. Data was collected through document review, conducting and an interview with accounting department staff, and observation as well. In this study, costs are allocated according to the relevant bases and the costs of services provided by oncology ward of Tohid hospital of Kurdistan in 2014 are calculated through traditional costing and activity-based costing and then they are compared with each other. The costs of services provided by the oncology ward were estimated about 29 billion Rials using traditional costing and they were about 35 billion Rials using activity-based costing. Direct and indirect costs are accounted for 84% and 16% of total costs. And drug (53%) and manpower (23%) have the highest costs comparing to other cost headings. The cost of services provided by the oncology ward using activity-based costing is nearly 6 billion Rilas higher than traditional costing that is activity-based costing presents more accurate information of costs. Thus, it is suggested to apply activity-based costing in hospitals. Also, the results indicate that managers do not consider indirect costs, especially overhead costs. Hence, these kinds of costs should be managed properly.