MHA 706 FINAL
, Direct Costs - correct answer Costs unique and exclusive to a department. GENERATE REVENUE
Ex- costs associated with providing the clinical testing such as staff and supplies.
Indirect costs (overheads) - correct answer Costs associated with shared resources used by the entire organization
Ex-costs associated with central services such as human resources and finance
Cost Allocation - correct answer Assign all overhead costs to the departments that create the need for such costs,
typically the patient services departments.
Cost Pool - correct answer Overhead amount to be allocated. Consists of
the direct costs of one overhead department.
Ex- HR Cost.
cost driver - correct answer Basis on which the cost pool will be allocated.
Ex- the cost driver for facilities overhead (building space depreciation, maintenance, utilities, and so on) might be
the amount of space used by each department that uses the organization's facilities.
Cost Allocation Rate - correct answer dividing # of dollars in cash pool/total volume of cost driver
What makes a good cost driver? - correct answer Perceived as being fair and promote organizational cost
reduction.
, Direct Costs - correct answer Costs unique and exclusive to a department. GENERATE REVENUE
Ex- costs associated with providing the clinical testing such as staff and supplies.
Indirect costs (overheads) - correct answer Costs associated with shared resources used by the entire organization
Ex-costs associated with central services such as human resources and finance
Cost Allocation - correct answer Assign all overhead costs to the departments that create the need for such costs,
typically the patient services departments.
Cost Pool - correct answer Overhead amount to be allocated. Consists of
the direct costs of one overhead department.
Ex- HR Cost.
cost driver - correct answer Basis on which the cost pool will be allocated.
Ex- the cost driver for facilities overhead (building space depreciation, maintenance, utilities, and so on) might be
the amount of space used by each department that uses the organization's facilities.
Cost Allocation Rate - correct answer dividing # of dollars in cash pool/total volume of cost driver
What makes a good cost driver? - correct answer Perceived as being fair and promote organizational cost
reduction.
