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Bachelor Thesis from the year 2013 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 78%, Birzeit University (Business and Econimics school), course: Seminar in Accounting, language: English, abstract: Using the Volume Based Costing (VBC), which is a traditional costing system in hospitals especially if it used to accounting for surgical wards is not efficient and effective. However, prices for medical surgeries calculated using traditional costing system as VBC will not recover the costs incurred by the hospital for these surgeries, if the hospital uses VBC will suffer deficit because the revenues, represented by charged prices, collected for specific medical services will not recover the costs incurred. The reason is, however, the VBC is allocates all the costs into one cost driver, this would give all costs objects unfair share of incurred costs not according to real usage of these costs.To solve that problem, and to set fair prices for patients and hospitals, a hospital should use an advanced costing system as Activity Based Costing (ABC), which is uses more than one costs driver and incur costs objects according to usage.For ArabCare Hospital, Palestine, the prices currently charged which is supposed to be calculated by used ABC is more accurate and fair for both the hospital and patients. However, if the hospital used the volume based costing (VBC) will not recover its costs and expenses. Then, prices charged currently in the operation prices code of ArabCare hospital is able to recover costs but it is needed to be updated periodically because the changes of market prices of medical supplies.