CSAF CERTIFICATION Exam Questions with
Verified Correct Answers
Incremental or marginal cost
used when costing decisions are being made with the understanding that there is a difference
in cost at two different activity or volume levels
Contribution Margin
The difference between marginal revenue and marginal cost. Equals the revenue received for
one unit of service less the marginal expenses incurred for one unit of service. Goes toward
supporting fixed costs; if it exceeds that it goes to profit.
Contribution margin
Difference between marginal revenue and marginal cost
Break even point
Total fixed cost divided by the contribution margin per unit equal
The break even point is the level of sales volume of a product producing the exact
amount of
contribution margin needed to cover fixed cost
Direct cost
Fixed or variable, but they are clearly and directly associated with the activity that is being
costed. Example direct salaries and supplies
indirect cost
,They are not clearly nor directly associated with the activity being costed. Overhead is
common term, are assigned to a service using some acceptable allocation method, Example:
administration provided in a hospital setting
Overhead is a common term
Indirect costs
ABC or activity based costing
Determining product costs using cost drivers or activity measures, that cause indirect cost to
be incurred.
Ideal cost drivers
Activities that pertain to each procedure in varying amounts
Activity based costing is generally
More accurate costing method than the proportionate allocation method. However often more
expensive to determine due to the necessary data collection
ABC example
Using specific equipment use to determine the allocation of depreciation and repair expense
Service line costing
Healthcare organizations have developed product lines based on major diagnostic categories
(for example, diseases of the digestive system or obstetric procedures).
The advantage of analyzing results by diagnostic category is that it develops an estimate of
total resources consumed, including resources consumed in shared departments
Service line costing example
, The resources consumed by a cardiac patient in an imaging department are considerably more
than the resources consumed by a patient with pneumonia
Profitability Analysis
Shift financial analysis toward the major lines.
Determine the advantages or disadvantages of being in that product line.
Emphasize or de-emphasize certain services.
Determine data for use in benchmarking among clinical specialties.
Product service line costing
be useful in assessing the profitability of a proposed managed care contract and in developing
carve-out rates for specific types of cases (for example, open-heart surgeries and bone
marrow transplants).
Activity based costing is
A method of determining product costs using cost drivers or activity measures that cause
indirect costs to be incurred.
Responsibility Accounting
The assignment or allocation of cost to the individual manager who is primarily responsible
for making decisions about those costs.
Once the primarily responsibility for incurring a specific cost has been established, various
management reports, such as departmental expense reports, can be developed to assess a
manager's effectiveness
Standard costing system
Verified Correct Answers
Incremental or marginal cost
used when costing decisions are being made with the understanding that there is a difference
in cost at two different activity or volume levels
Contribution Margin
The difference between marginal revenue and marginal cost. Equals the revenue received for
one unit of service less the marginal expenses incurred for one unit of service. Goes toward
supporting fixed costs; if it exceeds that it goes to profit.
Contribution margin
Difference between marginal revenue and marginal cost
Break even point
Total fixed cost divided by the contribution margin per unit equal
The break even point is the level of sales volume of a product producing the exact
amount of
contribution margin needed to cover fixed cost
Direct cost
Fixed or variable, but they are clearly and directly associated with the activity that is being
costed. Example direct salaries and supplies
indirect cost
,They are not clearly nor directly associated with the activity being costed. Overhead is
common term, are assigned to a service using some acceptable allocation method, Example:
administration provided in a hospital setting
Overhead is a common term
Indirect costs
ABC or activity based costing
Determining product costs using cost drivers or activity measures, that cause indirect cost to
be incurred.
Ideal cost drivers
Activities that pertain to each procedure in varying amounts
Activity based costing is generally
More accurate costing method than the proportionate allocation method. However often more
expensive to determine due to the necessary data collection
ABC example
Using specific equipment use to determine the allocation of depreciation and repair expense
Service line costing
Healthcare organizations have developed product lines based on major diagnostic categories
(for example, diseases of the digestive system or obstetric procedures).
The advantage of analyzing results by diagnostic category is that it develops an estimate of
total resources consumed, including resources consumed in shared departments
Service line costing example
, The resources consumed by a cardiac patient in an imaging department are considerably more
than the resources consumed by a patient with pneumonia
Profitability Analysis
Shift financial analysis toward the major lines.
Determine the advantages or disadvantages of being in that product line.
Emphasize or de-emphasize certain services.
Determine data for use in benchmarking among clinical specialties.
Product service line costing
be useful in assessing the profitability of a proposed managed care contract and in developing
carve-out rates for specific types of cases (for example, open-heart surgeries and bone
marrow transplants).
Activity based costing is
A method of determining product costs using cost drivers or activity measures that cause
indirect costs to be incurred.
Responsibility Accounting
The assignment or allocation of cost to the individual manager who is primarily responsible
for making decisions about those costs.
Once the primarily responsibility for incurring a specific cost has been established, various
management reports, such as departmental expense reports, can be developed to assess a
manager's effectiveness
Standard costing system
