Exam (elaborations)
MHA 706 FINAL EXAM|50 COMPLETE QUESTIONS WITH ANSWERS
MHA 706 FINAL EXAM|50 COMPLETE QUESTIONS WITH ANSWERS
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MHA 706 FINAL EXAM|50 COMPLETEQUESTIONS WITH ANSWERS
Direct Costs - -Costs unique and exclusive to a department. GENERATE
REVENUE
Ex- costs associated with providing the clinical testing such as staff and
supplies.
-Indirect costs (overheads) - -Costs associated with shared resources used
by the entire organization
Ex-costs associated with central services such as human resources and
finance
-Cost Allocation - -Assign all overhead costs to the departments that create
the need for such costs, typically the patient services departments.
-Cost Pool - -Overhead amount to be allocated.
Consists of the direct costs of one overhead department.
Ex- HR Cost.
-cost driver - -Basis on which the cost pool will be allocated.
Ex- the cost driver for facilities overhead (building space depreciation,
maintenance, utilities, and so on) might be the amount of space used by
each department that uses the organization's facilities.
-Cost Allocation Rate - -dividing # of dollars in cash pool/total volume of
cost driver
-What makes a good cost driver? - -Perceived as being fair and promote
organizational cost reduction.
Assume that the cost driver for Housekeeping Services is the amount of
space occupied. User departments in total occupy 200,000 square feet of
space.
-Direct cost allocation method - -the costs of each support department are
allocated directly to, and only to, the patient services departments.
-Step-down allocation method - -allocates support-department costs to
other support departments and to operating departments in a sequential
, manner that partially recognizes the mutual services provided among all
support departments
-What is the most used Cost Allocation Method? - -Step-down method is
used more because it recognizes at least some of those interest support
department relationships. So, it's a fairer in efficient way of doing the
allocation.
-Reciprocal allocation method - -allocates support-department costs to
operating departments by fully recognizing the mutual services provided
among all support departments
-variable costs - -costs that vary directly with the level of production.
-Examples of variable expenses - -utility bill, groceries, gasoline, phone bill
-Contribution Margin - -The amount remaining from sales revenues after all
variable expenses have been deducted.
Revenue-Variable Expenses
-Full-cost pricing - -Pricing method that uses all relevant variable costs in
setting a product's price and allocates those fixed costs not directly
attributed to the production of the priced item.
-Breakeven Volume Calculation - -Break-Even point (units) = Fixed Costs ÷
(Sales price per unit - Variable costs per unit
-Basic sources of capital - -Working Capital, Equity Capital, Debt Capital
-Factors that impact interest rates - --Time to maturity
-Default risk of debt issuer
-Inflation rate
-Liquidity of debt
-Protective provisions of security issuer
-Debt Contracts - -are agreements by the borrowers to pay the lenders
fixed dollar amounts at periodic intervals.
Also called (Bond indenture, Loan agreement, Promissory note)
-bond interest rate - --Both the interest rate an issuer pays its bondholders
and the timing of payments are set when a bond is issued
-Interest on a bond accrues daily and is paid in semiannual installments over
the life of the bond
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