MHA 706 Module 4 – Questions With Complete
Solutions
Patient Service Departments Correct Ans - Are often called revenue
centers
Indirect Cost Correct Ans - Are cost associated with shared
resources used by the entire organization
Direct Costs Correct Ans - Are costs unique and exclusive to a
department
Overhead departments Correct Ans - Are often called costs centers
Cost Pool Correct Ans - Is the overhead amount to be allocated
Cost Driver Correct Ans - Is the basis on which the cost pool will be
allocated
When you divide the "Dollars in the Cost Pool" by "Total Volume of Cost
Driver" what have you determined? Correct Ans - Allocation Rate
What characteristics should a Effective cost drivers have? Correct Ans
- Perceived as being fair,
Promote organizational cost reduction
Types of allocation methods. Correct Ans - Reciprocal Method,
Step-Down Method, Direct 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? Correct 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. True or false? Correct Ans -
False
Solutions
Patient Service Departments Correct Ans - Are often called revenue
centers
Indirect Cost Correct Ans - Are cost associated with shared
resources used by the entire organization
Direct Costs Correct Ans - Are costs unique and exclusive to a
department
Overhead departments Correct Ans - Are often called costs centers
Cost Pool Correct Ans - Is the overhead amount to be allocated
Cost Driver Correct Ans - Is the basis on which the cost pool will be
allocated
When you divide the "Dollars in the Cost Pool" by "Total Volume of Cost
Driver" what have you determined? Correct Ans - Allocation Rate
What characteristics should a Effective cost drivers have? Correct Ans
- Perceived as being fair,
Promote organizational cost reduction
Types of allocation methods. Correct Ans - Reciprocal Method,
Step-Down Method, Direct 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? Correct 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. True or false? Correct Ans -
False
