applying activity based costing (abc) method to calculate cost price in hospital and remedy services

background: activity based costing (abc) is one of the new methods began appearing as a costing methodol­ogy in the 1990's. it calculates cost price by determining the usage of resources. in this study, abc method was used for calculating cost price of remedial services in hospitals. methods: to apply abc method, shahid faghihi hospital was selected. first, hospital units were divided into three main departments: administrative, diagnostic, and hospitalized. second, activity centers were defined by the activ­ity analysis method. third, costs of administrative activity centers were allocated into diagnostic and opera­tional departments based on the cost driver. finally, with regard to the usage of cost objectives from services of activity centers, the cost price of medical services was calculated. results: the cost price from abc method significantly differs from tariff method. in addition, high amount of indirect costs in the hospital indicates that capacities of resources are not used properly. conclusion: cost price of remedial services with tariff method is not properly calculated when compared with abc method. abc calculates cost price by applying suitable mechanisms but tariff method is based on the fixed price. in addition, abc represents useful information about the amount and combination of cost price services.