• The Ma Kuang TCM Medical Network—Profitability Management of Medical Service Items

Abstract

In the period after 2002, due to the saturation of the traditional Chinese medicine (TCM) market, Ma Kuang TCM Center’s revenue growth was capped, yet its net profit margin showed a downward trend. Then, in the summer of 2006, Ma Kuang TCM Center’s CEO pondered whether to reassess the service cost calculation of service items and whether to implement profitability management. By analyzing such events, this case allows students to learn how to calculate the service cost figures by means of activity-based costing, and to use controllable and uncontrollable concepts to conduct the profitability management of service items.

Keywords: Activity-based costing, Service cost, Controllable and uncontrollable, Profit management