LSUS MHA 706 Final Exam Study Guide | Healthcare Finance & Cost Allocation

1. Cost Driver is the ANS : basis cost pool will be allocated
n, n, n, n, n, n, n, n, n, n, n, n,




2. Cost Pool is the
n, n, n, n, ANS n,: n, n , overhead n,amount n,to n,be n,allocated


3. Overhead Departments are ANS : often called cost centers
n, n, n, n, n,n, n, n, n,




4. Indirect Costs: Costs of shared resources used by the entire organization
n, n, n, n, n, n, n, n, n, n,




5. Patient Service Departments are ANS : often called revenue centers
n, n, n, n, n, n,n, n, n, n,




6. Direct Costs are ANS : costs unique and exclusive to a department
n, n, n, n, n,n, n, n, n, n, n, n,




7. "Dollars in the Cost Pool" / "Total Volume of Cost Driver" =: Allocation Rate
n, n, n, n, n, n, n, n, n, n, n, n, n,




8. Effective cost drivers should have what characteristics(s)?: -Promote orga-
n, n, n, n, n, n, n, n,


nizational cost reduction
n, n, n,




-Perceived as being fair n, n, n,




9. is NOT a type of allocation method?: Step-Up Method
n, n, n, n, n, n, n, n,




10. As an Accounting Manager - you are responsible for allocating the cost of
n, n, n, n, n, n, n, n, n, n, n, n,


facilities to other departments. What would be an appropriate cost driver
n, n, n, n, n, n, n, n, n, n, n,




for you to use for this allocation?: -Square footage of the department
n, n, n, n, n, n, n, n, n, n, n,




1 n,/

,-Housekeeping

11. TRUE/FALSE: Once a company uses the Direct Method to allocate costs to
n, n, n, n, n, n, n, n, n, n, n,


revenue-producing departments within the facility - the total level of expenses
n, n, n, n, n, n, n, n, n, n, n,


decreases for the organization.: False
n, n, n, n, n,




12. When using the direct cost allocation system - often you are
n, n, n, n, n, n, n, n, n, n,


allocating the cost of to
n, n, Patient Service Departments.:
n, Support n, n, n, n, n, n,


(overhead) Departments
n, n,




13. are accounting methods to account for "cost" at an individual n, n, n, n, n, n, n, n, n,


service level.: Time Driven-Costing (TDBC)
n, n, n, n, n,




Activity Based Costing (ABC)
n, n, n,


Cost-to-Charge
n, Ratio n,


(CCR)
n, Relative
n, Value n,


(RVU)
n,




14. are true assumption(s) of the Cost-to-Charge Ratio Method.: - n, n, n, n, n, n, n, n,


Each service consumes overhead costs in the same proportion as the
n, n, n, n, n, n, n, n, n, n, n,


department as a whole
n, n, n, n,




Charges reflect the level of intensity of the service provided.
n, n, n, n, n, n, n, n, n,




15. Activity Based Costing (ABC) begins with
n, n, n, n, n, n, that comprise the n, n,


service provided.: Individual Activities
n, n, n, n,




16. Calculate ANS : total costs of the service by aggregating activity costs
n, n, n,n, n, n, n, n, n, n, n, n,




17. Estimate ANS : cost of each activity
n, n, n, n, n, n, n,




18. Collect ANS : activity data for each service
n, n, n,n, n, n, n, n,




19. Identify ANS : the relevant activities
n, n, n,n, n, n,




20. Assign ANS : cost drivers for each activity
n, n, n,n, n, n, n, n,

,2 n,/

, 21. One use of managerial accounting information within a health
n, n, n, n, n, n, n, n,


service organization is to. ANS : -Set prices on services
n, n, n, n, n, n, n, n, n, n, n,




-Identify the lowest feasible price when prices are negotiated
n, n, n, n, n, n, n, n,




-Determine the profitability of different service lines n, n, n, n, n, n,




22. When a provider has market dominance, and can set its own prices (within
n, n, n, n, n, n, n, n, n, n, n, n,


reason), it is said to be a price setter. In other situations, providers are
n, n, n, n, n, n, n, n, n, n, n, n, n, n,


price takers.
n, may describe a situation where a provider is a "price
n, n, n, n, n, n, n, n, n, n, n,


taker.": There is a payer dominance
n, n, n, n, n, n,




It is a perfectly competitive market
n, n, n, n, n,




The provider is dealing with a government payer/program
n, n, n, n, n, n, n,




23. Under marginal cost pricing, prices for a service are set to cover
n, n, n, n, n, n, n, n, n, n, n,




costs.: incremental n,




24. To break-even, revenues: must equal total costs
n, n, n, n, n, n,




25. Target costing is used by: price takers n, n, n, n, n, n,




26. Capitation rates are quoted: per member per month basis n, n, n, n, n, n, n, n,




27. Scenario analysis: is technique in which alternative scenarios are analyzedn, n, n, n, n, n, n, n, n,




28. The interest rate is described as then, n, n, n, n, n, n, on a debt security.: cost
n, n, n, n,


of capital
n, n,




29. Subordinated debenture bonds n, n,


Debenture bonds
n, n,




Mortgage bonds: "Corporate" bond types n, n, n, n,




30. Bond contracts typically contain. ANS : Trustee n, n, n, n, n, n,n,



3 n,/