MHA 706 FINAL PRACTICE SCRIPT 2026
QUESTIONS WITH ANSWERS GRADED A+
⫸ Cost Driver Answer: Is the basis on which the cost pool will be
allocated
⫸ Cost Pool Answer: Is the overhead amount to be allocated
⫸ Overhead departments Answer: Are often called costs centers
⫸ Patient Service Departments Answer: Are often called revenue
centers
⫸ Direct Costs Answer: Are costs unique and exclusive to a department
⫸ When you divide the "Dollars in the Cost Pool" by "Total Volume of
Cost Driver" - you have determined .... Answer: The Allocation Rate
⫸ Effective cost drivers should have the following characteristic(s)
Answer: -Perceived as being fair
-Promote Organizational Cost Reduction
, ⫸ Which of the following is NOT a type of allocation method. Answer:
step-up method
⫸ As an Accounting Manager - you are responsible for allocating the
cost of Facilities to other departments. What would be an appropriate
cost driver for you to use for this allocation. Answer: Square footage of
the department
⫸ Once a company uses the direct method to allocate indirect costs to
revenue-producing departments within the facility - the total level of
expenses decreases for the organization. Answer: False
⫸ When using the direct cost allocation system - often you are
allocating the cost of xxxx to Patient Service Departments Answer:
Support (overhead) departments
⫸ Select all of the following options that are accounting methods to
account for "costs" at an individual service level Answer: Activity Based
Costing (ABC)
Relative Value Unit (RVU)
Time-Driven Activity Based Costing (TDABC)
Cost-to-Charge Ratio (CCR)
⫸ Select all of the true assumption(s) of the Cost-to-Charge Ratio
Method. Answer: Each service consumes overhead costs in the same
proportion as the department as a whole
QUESTIONS WITH ANSWERS GRADED A+
⫸ Cost Driver Answer: Is the basis on which the cost pool will be
allocated
⫸ Cost Pool Answer: Is the overhead amount to be allocated
⫸ Overhead departments Answer: Are often called costs centers
⫸ Patient Service Departments Answer: Are often called revenue
centers
⫸ Direct Costs Answer: Are costs unique and exclusive to a department
⫸ When you divide the "Dollars in the Cost Pool" by "Total Volume of
Cost Driver" - you have determined .... Answer: The Allocation Rate
⫸ Effective cost drivers should have the following characteristic(s)
Answer: -Perceived as being fair
-Promote Organizational Cost Reduction
, ⫸ Which of the following is NOT a type of allocation method. Answer:
step-up method
⫸ As an Accounting Manager - you are responsible for allocating the
cost of Facilities to other departments. What would be an appropriate
cost driver for you to use for this allocation. Answer: Square footage of
the department
⫸ Once a company uses the direct method to allocate indirect costs to
revenue-producing departments within the facility - the total level of
expenses decreases for the organization. Answer: False
⫸ When using the direct cost allocation system - often you are
allocating the cost of xxxx to Patient Service Departments Answer:
Support (overhead) departments
⫸ Select all of the following options that are accounting methods to
account for "costs" at an individual service level Answer: Activity Based
Costing (ABC)
Relative Value Unit (RVU)
Time-Driven Activity Based Costing (TDABC)
Cost-to-Charge Ratio (CCR)
⫸ Select all of the true assumption(s) of the Cost-to-Charge Ratio
Method. Answer: Each service consumes overhead costs in the same
proportion as the department as a whole
