HCM 416 QUIZZES AND MOCK EXAM QUESTIONS AND
ANSWERS WITH COMPLETE SOLUTIONS VERIFIED LATEST
UPDATE
Break-even volume is defined as the volume needed for an organization (or
service program) to be financially self sufficient. What are the two types of break-
even conditions?
Accounting break-even
Economic breakeven
The correct formula to calculate "Accounting break-even" is
Total Revenues-Variable Costs-Fixed Costs= $0 (Profit)
What were the two ways that capitation was explored via graphical analysis?
Utilization/Membership
With Fee For Service (Volume Based)
Provider's financial risk is minimized if all costs are variable.
With Capitation
Provider's financial risk is minimized if all costs are fixed.
Direct Costs
Costs unique and exclusive to a department.
Indirect costs
Costs associated with shared resources used by the entire organization.
Overhead departments
,Are often called costs centers
Patient service departments
Are often called revenue centers
Cost pool
Is the overhead amount to be allocated
Cost driver
is the basis on which the cost pool will be allocated
When you divide the "dollars in the cost pool" by the "total volume of cost driver"
you have determined
allocation rate
Effective cost drivers should have the following characteristic(s)
perceived as being fair
promote organizational cost reduction
Which of the following is NOT a type of allocation method?
Step-Up Method
Direct Method
Reciprocal Method
Step-Down Method
Step-up Method
When using the direct cost allocation system- often you are allocating the cost of
XX to patient service departments
Support (overhead) departments
, 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
T/F
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.
False
Target costing is used by
price takers
Capitation rates are quoted
per member per month basis
Scenario Analysis
is a technique in which alternative scenarios are analyzed
To break even revenues
must equal total costs
The following options that are accounting methods to account for "costs" at an
individual service level
Activity Based Costing (ABC)
Cost-to-Charge Ratio (CCR)
Relative Value Unit (RVU)
Cost-to-Charge Ratio Method
ANSWERS WITH COMPLETE SOLUTIONS VERIFIED LATEST
UPDATE
Break-even volume is defined as the volume needed for an organization (or
service program) to be financially self sufficient. What are the two types of break-
even conditions?
Accounting break-even
Economic breakeven
The correct formula to calculate "Accounting break-even" is
Total Revenues-Variable Costs-Fixed Costs= $0 (Profit)
What were the two ways that capitation was explored via graphical analysis?
Utilization/Membership
With Fee For Service (Volume Based)
Provider's financial risk is minimized if all costs are variable.
With Capitation
Provider's financial risk is minimized if all costs are fixed.
Direct Costs
Costs unique and exclusive to a department.
Indirect costs
Costs associated with shared resources used by the entire organization.
Overhead departments
,Are often called costs centers
Patient service departments
Are often called revenue centers
Cost pool
Is the overhead amount to be allocated
Cost driver
is the basis on which the cost pool will be allocated
When you divide the "dollars in the cost pool" by the "total volume of cost driver"
you have determined
allocation rate
Effective cost drivers should have the following characteristic(s)
perceived as being fair
promote organizational cost reduction
Which of the following is NOT a type of allocation method?
Step-Up Method
Direct Method
Reciprocal Method
Step-Down Method
Step-up Method
When using the direct cost allocation system- often you are allocating the cost of
XX to patient service departments
Support (overhead) departments
, 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
T/F
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.
False
Target costing is used by
price takers
Capitation rates are quoted
per member per month basis
Scenario Analysis
is a technique in which alternative scenarios are analyzed
To break even revenues
must equal total costs
The following options that are accounting methods to account for "costs" at an
individual service level
Activity Based Costing (ABC)
Cost-to-Charge Ratio (CCR)
Relative Value Unit (RVU)
Cost-to-Charge Ratio Method
