MHA 706 Final Exam with Verified Answers Graded A+
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Course
MHA 706
Institution
MHA 706
MHA 706 Final Exam with Verified Answers Graded A+
partment
allocated
Are costs associated with shared re-
sources used by the entire organization
Cost Driver Is the basis on which the cost pool will be
Cost Pool Is the overhead amount to be allocated
Overhead departments Are often called co...
MHA 706 Final Exam with Verified Answers Graded A+
Are costs associated with shared re-
Indirect Costs
sources used by the entire organization
Is the basis on which the cost pool will be
Cost Driver
allocated
Cost Pool Is the overhead amount to be allocated
Overhead departments Are often called costs centers
Patient Service Departments Are often called revenue centers
Are costs unique and exclusive to a de-
Direct Costs
partment
When you divide the "Dollars in the Cost
Pool" by "Total Volume of Cost Driver" - The Allocation Rate
you have determined ....
Effective cost drivers should have the -Perceived as being fair
following characteristic(s) -Promote Organizational Cost Reduction
Which of the following is NOT a type of
step-up method
allocation method.
As an Accounting Manager - you are
responsible for allocating the cost of Fa-
cilities to other departments. What would Square footage of the department
be an appropriate cost driver for you to
use for this allocation.
Once a company uses the direct method
to allocate indirect costs to revenue-pro-
ducing departments within the facility - False
the total level of expenses decreases for
the organization.
When using the direct cost allocation
system - often you are allocating the cost Support (overhead) departments
of xxxx to Patient Service Departments
Activity Based Costing (ABC)
Select all of the following options that Relative Value Unit (RVU)
are accounting methods to account for Time-Driven Activity Based Costing (TD-
"costs" at an individual service level ABC)
Cost-to-Charge Ratio (CCR)
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, MHA 706 Final Exam with Verified Answers Graded A+
Each service consumes overhead costs
in the same proportion as the depart-
Select all of the true assumption(s) of the
ment as a whole
Cost-to-Charge Ratio Method.
Charges reflect the level of intensity of
the service provided
Activity based costing (ABC) begins with
the ..... that comprise the service provid- Individual Activities
ed.
The key to cost allocation under Activi- Collect- activity data for each service
ty-Based-Costing is to identify the activi- Identify- the relevant activities
ties that are performed to provide a par- Estimate- the cost of each activity
ticular service and then aggregate the Assign- cost drivers for each activities
costs of the activities. The steps required Calculate- the total costs of the service
to implement ABC are as follows: by aggregating activity costs
-Determine the profitability of different
One use of managerial accounting infor- service lines
mation within a health service organiza- -Identify the lowest feasible price when
tion is to... prices are negotiated
-Set prices on services
When a provider has market dominance,
and can set its own prices (within rea-
-There is payer dominance
son), it is said to be a price setter. In other
-It is a perfectly competitive market
situations, providers are price takers. Se-
-The provider is dealing with a govern-
lect the responses that may describe a
ment payer/program
situation where a provider is a "price-tak-
er."
Under marginal cost pricing, prices for a
incremental
service are set to cover .....costs
Target costing is used by price takers
is a technique in which alternative sce-
Scenario analysis
narios are analyzed
Capitation rates are quoted per member per month basis
To break-even, revenues must equal total costs
The interest rate is described as the .....
cost of capital
on a debt security.
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