Home And Community Care Program In Western Australia - Giude To The Unit Costs Spreadsheet - 2012 Page 3
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15Guide to the Unit Costs Spreadsheet
Guide to the Unit Costs Spreadsheet
1. INTRODUCTION
1.1 What are Unit Costs?
Most simply put, a Unit Cost is the cost of providing one unit of service. It is calculated by
dividing the total cost of providing a service by the units of service provided.
Units of service may be the hours of service delivered, the number of trips (one way in
HACC), the number of meals, et cetera.
1.2 Why do Unit Costs?
Unit Costs are useful because they provide information on the full cost of services being
provided. This information helps to:
gain an understanding of the actual costs of providing HACC services
assess which service areas are most cost effective
identify ways of improving the cost effectiveness of service areas
identify cost differences in different geographical areas
apply costs to the planning of services.
For service management, Unit Costs are important for:
providing information useful for funding submissions and in preparing tenders
providing information for assessing fees to be charged
comparing different outlets
deciding which areas of service delivery areas to focus on
providing information to help improve the efficiency of services (that is, services with high
Unit Costs are identified and can be examined more closely to determine why)
assessing the effect of changes to services (e.g. does the new roster system result in
lower Unit Costs?)
identifying which component of your service may be running high; e.g. direct service
costs or indirect costs. With this information you can target those areas where changes
may be needed.
1.3 Unit Cost vs Unit Price
The Unit Cost is the cost to deliver one unit of service, e.g. one hour of personal care or one
trip.
At its most simple, the Unit Cost = total ($) spent (HACC Annual Funding Level (AFL) + fee
income + other HACC related income) divided by the delivered units.
For example: if we spend $70,000 of funding plus fee income of $15,000 plus interest of
$5,000 to deliver our contracted 3,000 hours of personal care, the Unit Cost is $30.00 per
hour.
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