A sort of accounting procedure known as an extended cost involves dividing the unit cost of an item by the total number of units that were acquired in a single order. To get at an average cost per unit, most estimates of this kind typically factor in any additional fees related to the order.
Understanding the overall cost of each item is made much easier by doing this, especially if the goal is to resale those units to a customer base.
Consider a neighborhood grocer who buys food from a farmer to get an idea of how extended costs work. At a cost of $0.50 per potato, the grocer decides to buy 100 baking potatoes from the farmer. If the farmer does not charge any handling or shipping costs, the total cost of the order will be $50 USD.
If the farmer decides to charge a flat rate of $5 for the delivery of the potatoes, the overall cost of the order would be $55. The retailer can set the selling price to cover the cost and permit the generating of some profit from each potato sold because they have invested $0.55 in each potato.
When determining the retail price for any kind of goods or services, calculating the extended cost is crucial. The procedure determines how much each unit must be sold for in order for the business to break even by taking into account both the unit price paid for each item as well as ancillary costs related to the sale.
From there, the company can evaluate the state of the market, decide on a sale price that will likely be well received by customers, and allow it to be possible to sell every item in stock for at least a little profit.
While crucial for generating revenue, applying the same fundamental formula also aids in estimating operational expenditures and profits for a forthcoming tax period.
By doing this, the business may more easily plan on sending a specific amount of taxes to the proper agencies each accounting period, which helps to avoid underpaying taxes and the potential imposition of fines or penalties when the yearly return is filed.
Throughout the course of the business year, most organizations would often examine the extended cost on a monthly basis, adjusting for taxes and sale prices as needed.
Extended cost is the process of figuring out how much was paid for more than one unit of a product that was acquired at the same price. This is a fundamental accounting method used to calculate total expenses for goods sold at retail prices as well as nearly any other type of acquisition, such as real estate or vehicles.It is the primary method of determining earnings for firms and is also used to declare business expenses on the federal income tax Schedule C form.
Note the amount spent for each item. Calculate and include this sum in the item cost if you had to pay shipping or delivery fees. Divide the $24 by 100 and add that sum to the $3 price, for instance, if you purchased 100 things at $3 each and paid $24 in shipping fees. The final price per item is $3.24.
By dividing $3.24 by 100, you can determine the additional cost. The additional fee is $324. To estimate a retail price that will make a profit, this computation must be performed for every product bought.
Include any other fees that were incurred, like as taxes or delivery costs. Divide the total by the number of parts. The price of things ordered by the dozen or gross is determined in the same way.
Extended Cost-Effectiveness Analysis (ECEA) is a type of quantitative economic analysis that evaluates the financial and health effects of health policy.
It is an extension of cost-effectiveness analysis, which examines the relative costs and gains in health outcomes (in the form of years of life saved, premature deaths averted, quality- or disability-adjusted life years gained/averted, etc.) various interventions.
In the economic analysis of health policies, ECEA also takes into account non-health benefits like financial risk protection and distributional effects like equality.
The primary goal of health policy is to enhance population-level health outcomes (such as a decrease in premature death and morbidity).
Health plans, however, can offer additional advantages that go beyond just the healthcare industry. An major non-health benefit of such policies is the provision of financial risk protection (FRP), or the reduction of individual and household poverty
In addition to increased health equality among the population by providing progressive redistribution of the health benefits and poverty prevented.
ECEA gives the evaluation of health policy in three areas:
1) Health improvements
2) Private expenses avoided
3) FRP; all per population grouping
We can also determine the outcomes of health improvements and financial security per dollar spent by assessing the overall expenditures of the strategy.
In this regard, every policy or intervention can be positioned in a two-dimensional space by 1) health benefits per dollar spending and 2) FRP per dollar expenditure.
When making decisions, policymakers can then graphically compare various policies and actions while considering a variety of factors.
In a broader sense, the additional dimension of assessment outside of the health sector is not restricted to financial advantages but may also include educational, agricultural, and environmental benefits, to mention a few.
ECEA is capable of evaluating disaggregation of any kind, including geographic and demographic data, in addition to the equality between various income quintiles.
Here is a list of recent ECEA studies:
|Expanding surgical access
||Task sharing, public finance
|Home-based neonatal care package
|Diarrhea and pneumonia treatment
|Human papillomavirus vaccination to prevent cervical cancer
|Universal coverage for mental, neurological, and substance use disorders
|Selected ECEAs for cardiovascular diseases
||Public finance of interventions, tobacco taxation, regulation of salt
||China, Ethiopia, South Africa
|Motorcycle helmet laws
|Use of liquefied petroleum gas and other clean energy sources in household
|Postponing adolescent parity
||Universal public finance; policies to improve ease of borrowing for treatment costs
||Conditional cash transfers
|Water and sanitation
||Clean piped water and improved sanitation
||China, Lebanon, Armenia
||India, Ethiopia, Malaysia
*This list is adapted from: Verguet and Jamison. 2018. Chapter 8. Health policy analysis: applications of extended cost-effectiveness analysis (ECEA) methodology in DCP3. In: Jamison DT, Nugent R, Gelband H, Horton S, Jha P, Laxminarayan R, eds. Disease Control Priorities. Volume 9: Disease control priorities, improving health and reducing poverty. Washington, DC: World Bank 2018.