There is no unique answer to the question of what an ongoing program costs in medical schools. The estimates of program costs generated by classical methods of cost accounting are unsatisfactory because such accounting cannot deal with the joint production or joint cost problem. Activity analysis models aim at calculating the impact of alternative combinations of school activities. As now practiced, activity analysis yields the incremental cost of an activity given all other school activities, that is, pure program costs. Such analysis is a potentially useful management tool. Input/output analysis is a special form of activity analysis in which some activities provide both final outputs and input into other activities. Following the introduction in Section I, this paper deals with cost analysis in section II and III. Section II discusses cost allocation studies that use the tools of classical cost accounting. Section III analyzes the use of linear regression as a tool for cost allocation, and Section IV examines activity analysis and optimization analysis. (Author/PG)