HCM 416 EXIT EXAM REVIEW QUESTIONS AND ANSWERS
WITH COMPLETE SOLUTIONS VERIFIED
Define "fixed cost"
These cost are more or less known with certainty, regardless of the level of volume
within the relevant range; INDEPENDENT OF VOLUME; ie. OVERHEAD COSTS
(UTILITIES, MAINTENANCE, DEPRECIATION)
Fixed Cost
Remains the same when volume goes up
A cost that has already occurred or irrevocably committed is a...
Sunk Cost
What are "step Fixed costs"?
Costs that are fixed to a certain volume and then they increase to a higher level of fixed
cost to a certain level of volume
Discuss how fixed cost should be allocated to both support departments and
revenue producing departments
Determine a cost driver and disperse the appropriate amount of costs to each
department. The purpose is to assign all overhead costs to the departments that create
the need for such costs, typically the patient services department.
Step 1- Identify the cost pool
Step 2- Determine the cost driver
, Step 3- Calculate the allocation rate
Step 4- Determine the allocation amount
Define "variable costs"
Cost that are directly related to volume. For example, cost of clinic supplies used in
clinic.
What are examples of "variable costs"?
Clinic supplies, drugs
What is an example of variable costs?
A. Drugs
B. Maintenance Supervisor Salary
C. Building depreciation
D. Interest Expense
A. Drugs- CORRECT
Explain the sentence: "In the long-tern, all costs are variable"
All cost are variable because most people never use one of anything, most things are
bought in bulk. COST CLASSIFICATIONS HOLD ONLY IN THE SHORT RUN, SAY
FOR ONE YEAR, SO AT SOME POINT ALL COSTS ARE VARIABLE. If a company
begins to lose revenue, the company will begin to shed facilities and employees.
Define "cost pool"
the overhead amount to be allocated. It consists of the direct costs of one overhead
department.
Define "cost driver"
WITH COMPLETE SOLUTIONS VERIFIED
Define "fixed cost"
These cost are more or less known with certainty, regardless of the level of volume
within the relevant range; INDEPENDENT OF VOLUME; ie. OVERHEAD COSTS
(UTILITIES, MAINTENANCE, DEPRECIATION)
Fixed Cost
Remains the same when volume goes up
A cost that has already occurred or irrevocably committed is a...
Sunk Cost
What are "step Fixed costs"?
Costs that are fixed to a certain volume and then they increase to a higher level of fixed
cost to a certain level of volume
Discuss how fixed cost should be allocated to both support departments and
revenue producing departments
Determine a cost driver and disperse the appropriate amount of costs to each
department. The purpose is to assign all overhead costs to the departments that create
the need for such costs, typically the patient services department.
Step 1- Identify the cost pool
Step 2- Determine the cost driver
, Step 3- Calculate the allocation rate
Step 4- Determine the allocation amount
Define "variable costs"
Cost that are directly related to volume. For example, cost of clinic supplies used in
clinic.
What are examples of "variable costs"?
Clinic supplies, drugs
What is an example of variable costs?
A. Drugs
B. Maintenance Supervisor Salary
C. Building depreciation
D. Interest Expense
A. Drugs- CORRECT
Explain the sentence: "In the long-tern, all costs are variable"
All cost are variable because most people never use one of anything, most things are
bought in bulk. COST CLASSIFICATIONS HOLD ONLY IN THE SHORT RUN, SAY
FOR ONE YEAR, SO AT SOME POINT ALL COSTS ARE VARIABLE. If a company
begins to lose revenue, the company will begin to shed facilities and employees.
Define "cost pool"
the overhead amount to be allocated. It consists of the direct costs of one overhead
department.
Define "cost driver"
