While the cost of using new health care
technologies is rising rapidly, most managers
view the control of labor costs as the long term
solution to survival in a very competitive
operating climate. During class we discussed four
conceptual models pertaining to cost behavior for
budgeting purposes: fixed cost, semi-fixed cost,
variable cost and semi-variable cost. Discuss how
each of these models describes how labor costs
“behave”. Use specific examples to illustrate
your explanations. If you were called upon to
explain a budget in your workplace, which of
these models appears to be the most relevant in
forecasting labor operating expenses?