LSUS MHA 706 FINAL – LORD 2025
Cost Driver is the... - answer basis cost pool will be allocated
Cost Pool is the... - answer overhead amount to be allocated
Overhead Departments are... - answer often called cost centers
Indirect Costs - answer Costs of shared resources used by the entire organization
Patient Service Departments are... - answer often called revenue centers
Direct Costs are... - answer costs unique and exclusive to a department
"Dollars in the Cost Pool" / "Total Volume of Cost Driver" = - answer Allocation Rate
Effective cost drivers should have what characteristics(s)? - answer-Promote
organizational cost reduction
-Perceived as being fair
__________ is NOT a type of allocation method? - answerStep-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
-Housekeeping
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. - answerFalse
When using the direct cost allocation system - often you are allocating the cost of
__________ to Patient Service Departments. - answerSupport (overhead) Departments
__________ are accounting methods to account for "cost" at an individual service level.
- answerTime Driven-Costing (TDBC)
Activity Based Costing (ABC)
Cost-to-Charge Ratio (CCR)
Relative Value (RVU)
__________ are true assumption(s) of the Cost-to-Charge Ratio Method. - answerEach
service consumes overhead costs in the same proportion as the department as a whole
, Charges reflect the level of intensity of the service provided.
Activity Based Costing (ABC) begins with _________ that comprise the service
provided. - answerIndividual Activities
Calculate... - answertotal costs of the service by aggregating activity costs
Estimate... - answercost of each activity
Collect... - answeractivity data for each service
Identify... - answerthe relevant activities
Assign... - answercost drivers for each activity
One use of managerial accounting information within a health service organization is
to.... - answer-Set prices on services
-Identify the lowest feasible price when prices are negotiated
-Determine the profitability of different service lines
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." - answerThere is a payer
dominance
It is a perfectly competitive market
The provider is dealing with a government payer/program
Under marginal cost pricing, prices for a service are set to cover __________ costs. -
answerincremental
To break-even, revenues - answermust equal total costs
Target costing is used by - answerprice takers
Capitation rates are quoted - answerper member per month basis
Scenario analysis - answeris technique in which alternative scenarios are analyzed
The interest rate is described as the __________ on a debt security. - answercost of
capital
Subordinated debenture bonds
Debenture bonds
Mortgage bonds - answer"Corporate" bond types
Bond contracts typically contain.... - answerTrustee designation
Cost Driver is the... - answer basis cost pool will be allocated
Cost Pool is the... - answer overhead amount to be allocated
Overhead Departments are... - answer often called cost centers
Indirect Costs - answer Costs of shared resources used by the entire organization
Patient Service Departments are... - answer often called revenue centers
Direct Costs are... - answer costs unique and exclusive to a department
"Dollars in the Cost Pool" / "Total Volume of Cost Driver" = - answer Allocation Rate
Effective cost drivers should have what characteristics(s)? - answer-Promote
organizational cost reduction
-Perceived as being fair
__________ is NOT a type of allocation method? - answerStep-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
-Housekeeping
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. - answerFalse
When using the direct cost allocation system - often you are allocating the cost of
__________ to Patient Service Departments. - answerSupport (overhead) Departments
__________ are accounting methods to account for "cost" at an individual service level.
- answerTime Driven-Costing (TDBC)
Activity Based Costing (ABC)
Cost-to-Charge Ratio (CCR)
Relative Value (RVU)
__________ are true assumption(s) of the Cost-to-Charge Ratio Method. - answerEach
service consumes overhead costs in the same proportion as the department as a whole
, Charges reflect the level of intensity of the service provided.
Activity Based Costing (ABC) begins with _________ that comprise the service
provided. - answerIndividual Activities
Calculate... - answertotal costs of the service by aggregating activity costs
Estimate... - answercost of each activity
Collect... - answeractivity data for each service
Identify... - answerthe relevant activities
Assign... - answercost drivers for each activity
One use of managerial accounting information within a health service organization is
to.... - answer-Set prices on services
-Identify the lowest feasible price when prices are negotiated
-Determine the profitability of different service lines
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." - answerThere is a payer
dominance
It is a perfectly competitive market
The provider is dealing with a government payer/program
Under marginal cost pricing, prices for a service are set to cover __________ costs. -
answerincremental
To break-even, revenues - answermust equal total costs
Target costing is used by - answerprice takers
Capitation rates are quoted - answerper member per month basis
Scenario analysis - answeris technique in which alternative scenarios are analyzed
The interest rate is described as the __________ on a debt security. - answercost of
capital
Subordinated debenture bonds
Debenture bonds
Mortgage bonds - answer"Corporate" bond types
Bond contracts typically contain.... - answerTrustee designation
