LSUS MHA 706 FINAL EXAM QUESTIONS AND
ANSWERS 2026-2027
1. Cost Driver is the ANS : basis cost pool will be allocated
2. Cost Pool is the ANS : overhead amount to be allocated
3. Overhead Departments are ANS : often called cost centers
4. Indirect Costs: Costs of shared resources used by the entire organization
5. Patient Service Departments are ANS : often called revenue centers
6. Direct Costs are ANS : costs unique and exclusive to a department
7. "Dollars in the Cost Pool" / "Total Volume of Cost Driver" =: Allocation Rate
8. Effective cost drivers should have what characteristics(s)?: -Promote orga-
nizational cost reduction
-Perceived as being fair
9. is NOT a type of allocation method?: Step-Up Method
10. 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?: -Square footage of the department
1/
,-Housekeeping
11. TRUE/FALSE: Once a company uses the Direct Method to allocate costs to
revenue-producing departments within the facility - the total level of expenses
decreases for the organization.: False
12. When using the direct cost allocation system - often you are allocating
the cost of to Patient Service Departments.: Support (overhead)
Departments
13. are accounting methods to account for "cost" at an individual
service level.: Time Driven-Costing (TDBC)
Activity Based Costing (ABC)
Cost-to-Charge Ratio (CCR)
Relative Value (RVU)
14. are true assumption(s) of the Cost-to-Charge Ratio Method.: -
Each service consumes overhead costs in the same proportion as the department
as a whole
Charges reflect the level of intensity of the service provided.
15. Activity Based Costing (ABC) begins with that comprise the
service provided.: Individual Activities
16. Calculate ANS : total costs of the service by aggregating activity costs
17. Estimate ANS : cost of each activity
18. Collect ANS : activity data for each service
19. Identify ANS : the relevant activities
20. Assign ANS : cost drivers for each activity
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,21. One use of managerial accounting information within a health service
organization is to. ANS : -Set prices on services
-Identify the lowest feasible price when prices are negotiated
-Determine the profitability of different service lines
22. When a provider has market dominance, and can set its own prices (within
reason), it is said to be a price setter. In other situations, providers are price
takers. may describe a situation where a provider is a "price
taker.": There is a payer dominance
It is a perfectly competitive market
The provider is dealing with a government payer/program
23. Under marginal cost pricing, prices for a service are set to cover
costs.: incremental
24. To break-even, revenues: must equal total costs
25. Target costing is used by: price takers
26. Capitation rates are quoted: per member per month basis
27. Scenario analysis: is technique in which alternative scenarios are analyzed
28. The interest rate is described as the on a debt security.: cost
of capital
29. Subordinated debenture bonds
Debenture bonds
Mortgage bonds: "Corporate" bond types
30. Bond contracts typically contain. ANS : Trustee
3/
, designation Interest rate and type
Maturity agreements
Restrictive covenant
31. This is the institution that will ensure that the bond-holder's rights are
respected (usually financial designation).: Trustee designation
32. This typically falls under a 'general provision' portion of the contract when
the bond return is discussed.: Interest rate and type
33. This typically falls under a 'general provisions' portion of the contract
where a bond will mature.: Maturity agreements
34. This relates to one of the some restrictions that the organization may
have to abide by. This is typically related to some sort of minimum financial
conditions.: Restrictive covenant
35. Call Provisions ANS : permit borrower to redeem the debt prior to maturity
36. Interest Rate ANS : is the bond's required rate of return
37. The financial value of an asset stems...... from the asset's expected cash flow.
38. Debt Ratings ANS : reflect the probability of default
39. Nothing ANS : is riskless! Remember that any investment has risk.
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ANSWERS 2026-2027
1. Cost Driver is the ANS : basis cost pool will be allocated
2. Cost Pool is the ANS : overhead amount to be allocated
3. Overhead Departments are ANS : often called cost centers
4. Indirect Costs: Costs of shared resources used by the entire organization
5. Patient Service Departments are ANS : often called revenue centers
6. Direct Costs are ANS : costs unique and exclusive to a department
7. "Dollars in the Cost Pool" / "Total Volume of Cost Driver" =: Allocation Rate
8. Effective cost drivers should have what characteristics(s)?: -Promote orga-
nizational cost reduction
-Perceived as being fair
9. is NOT a type of allocation method?: Step-Up Method
10. 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?: -Square footage of the department
1/
,-Housekeeping
11. TRUE/FALSE: Once a company uses the Direct Method to allocate costs to
revenue-producing departments within the facility - the total level of expenses
decreases for the organization.: False
12. When using the direct cost allocation system - often you are allocating
the cost of to Patient Service Departments.: Support (overhead)
Departments
13. are accounting methods to account for "cost" at an individual
service level.: Time Driven-Costing (TDBC)
Activity Based Costing (ABC)
Cost-to-Charge Ratio (CCR)
Relative Value (RVU)
14. are true assumption(s) of the Cost-to-Charge Ratio Method.: -
Each service consumes overhead costs in the same proportion as the department
as a whole
Charges reflect the level of intensity of the service provided.
15. Activity Based Costing (ABC) begins with that comprise the
service provided.: Individual Activities
16. Calculate ANS : total costs of the service by aggregating activity costs
17. Estimate ANS : cost of each activity
18. Collect ANS : activity data for each service
19. Identify ANS : the relevant activities
20. Assign ANS : cost drivers for each activity
2/
,21. One use of managerial accounting information within a health service
organization is to. ANS : -Set prices on services
-Identify the lowest feasible price when prices are negotiated
-Determine the profitability of different service lines
22. When a provider has market dominance, and can set its own prices (within
reason), it is said to be a price setter. In other situations, providers are price
takers. may describe a situation where a provider is a "price
taker.": There is a payer dominance
It is a perfectly competitive market
The provider is dealing with a government payer/program
23. Under marginal cost pricing, prices for a service are set to cover
costs.: incremental
24. To break-even, revenues: must equal total costs
25. Target costing is used by: price takers
26. Capitation rates are quoted: per member per month basis
27. Scenario analysis: is technique in which alternative scenarios are analyzed
28. The interest rate is described as the on a debt security.: cost
of capital
29. Subordinated debenture bonds
Debenture bonds
Mortgage bonds: "Corporate" bond types
30. Bond contracts typically contain. ANS : Trustee
3/
, designation Interest rate and type
Maturity agreements
Restrictive covenant
31. This is the institution that will ensure that the bond-holder's rights are
respected (usually financial designation).: Trustee designation
32. This typically falls under a 'general provision' portion of the contract when
the bond return is discussed.: Interest rate and type
33. This typically falls under a 'general provisions' portion of the contract
where a bond will mature.: Maturity agreements
34. This relates to one of the some restrictions that the organization may
have to abide by. This is typically related to some sort of minimum financial
conditions.: Restrictive covenant
35. Call Provisions ANS : permit borrower to redeem the debt prior to maturity
36. Interest Rate ANS : is the bond's required rate of return
37. The financial value of an asset stems...... from the asset's expected cash flow.
38. Debt Ratings ANS : reflect the probability of default
39. Nothing ANS : is riskless! Remember that any investment has risk.
4/
