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MHA 706 Final Exam Questions And
Answers 100% Pass
Indirect Costs - ANS Are costs associated with shared resources used by the entire
organization
Cost Driver - ANS Is the basis on which the cost pool will be allocated
Cost Pool - ANS Is the overhead amount to be allocated
Overhead departments - ANS Are often called costs centers
Patient Service Departments - ANS Are often called revenue centers
Direct Costs - ANS Are costs unique and exclusive to a department
When you divide the "Dollars in the Cost Pool" by "Total Volume of Cost Driver" - you have
determined .... - ANS The Allocation Rate
Effective cost drivers should have the following characteristic(s) - ANS -Perceived as being
fair
-Promote Organizational Cost Reduction
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Which of the following is NOT a type of allocation method. - ANS step-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. -
ANS Square footage of the department
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. -
ANS False
When using the direct cost allocation system - often you are allocating the cost of xxxx to
Patient Service Departments - ANS Support (overhead) departments
Select all of the following options that are accounting methods to account for "costs" at an
individual service level - ANS Activity Based Costing (ABC)
Relative Value Unit (RVU)
Time-Driven Activity Based Costing (TDABC)
Cost-to-Charge Ratio (CCR)
Select all of the true assumption(s) of the Cost-to-Charge Ratio Method. - ANS Each 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 the ..... that comprise the service provided. -
ANS Individual Activities
The key to cost allocation under Activity-Based-Costing is to identify the activities that are
performed to provide a particular service and then aggregate the costs of the activities. The
steps required to implement ABC are as follows: - ANS Collect- activity data for each service
Identify- the relevant activities
MHA 706 Final Exam Questions And
Answers 100% Pass
Indirect Costs - ANS Are costs associated with shared resources used by the entire
organization
Cost Driver - ANS Is the basis on which the cost pool will be allocated
Cost Pool - ANS Is the overhead amount to be allocated
Overhead departments - ANS Are often called costs centers
Patient Service Departments - ANS Are often called revenue centers
Direct Costs - ANS Are costs unique and exclusive to a department
When you divide the "Dollars in the Cost Pool" by "Total Volume of Cost Driver" - you have
determined .... - ANS The Allocation Rate
Effective cost drivers should have the following characteristic(s) - ANS -Perceived as being
fair
-Promote Organizational Cost Reduction
, ©EVERLY 2025 ALL RIGHTS RESERVED
Which of the following is NOT a type of allocation method. - ANS step-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. -
ANS Square footage of the department
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. -
ANS False
When using the direct cost allocation system - often you are allocating the cost of xxxx to
Patient Service Departments - ANS Support (overhead) departments
Select all of the following options that are accounting methods to account for "costs" at an
individual service level - ANS Activity Based Costing (ABC)
Relative Value Unit (RVU)
Time-Driven Activity Based Costing (TDABC)
Cost-to-Charge Ratio (CCR)
Select all of the true assumption(s) of the Cost-to-Charge Ratio Method. - ANS Each 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 the ..... that comprise the service provided. -
ANS Individual Activities
The key to cost allocation under Activity-Based-Costing is to identify the activities that are
performed to provide a particular service and then aggregate the costs of the activities. The
steps required to implement ABC are as follows: - ANS Collect- activity data for each service
Identify- the relevant activities
