LSUS MHA 706 FINAL EXAM 2025 | FINANCIAL
MANAGEMENT MIDTERM | ALL QUESTIONS AND CORRECT
ANSWERS | ALREADY GRADED A+ | PROFESSOR VERIFIED
Question 1
What is the Cost Driver?
A) The overhead amount to be allocated.
B) The basis a cost pool will be allocated.
C) A department where costs are accumulated.
D) A cost unique and exclusive to a department.
E) A type of revenue.
Correct Answer: B) basis cost pool will be allocated
Rationale: Cost Driver is the basis a cost pool will be allocated.
Question 2
What is the Cost Pool?
A) The basis for cost allocation.
B) The overhead amount to be allocated.
C) A patient service department.
D) A direct cost.
E) A revenue center.
Correct Answer: B) overhead amount to be allocated
Rationale: Cost Pool is the overhead amount to be allocated.
Question 3
Overhead Departments are often called:
A) Revenue centers.
B) Patient service departments.
C) Cost centers.
D) Direct cost departments.
E) Profit centers.
Correct Answer: C) cost centers
Rationale: Overhead Departments are often called cost centers.
,Question 4
Indirect Costs are:
A) Costs unique and exclusive to a department.
B) Costs of shared resources used by the entire organization.
C) Costs directly traceable to a service.
D) Costs that vary with volume.
E) Costs that are easily assigned.
Correct Answer: B) Costs of shared resources used by the entire
organization
Rationale: Indirect Costs are costs of shared resources used by the
entire organization.
Question 5
Patient Service Departments are often called:
A) Cost centers.
B) Overhead departments.
C) Revenue centers.
D) Indirect cost departments.
E) Support departments.
Correct Answer: C) revenue centers
Rationale: Patient Service Departments are often called revenue
centers.
Question 6
Direct Costs are:
A) Costs of shared resources used by the entire organization.
B) Costs unique and exclusive to a department.
C) Costs allocated to multiple departments.
D) Always fixed costs.
E) Always variable costs.
Correct Answer: B) costs unique and exclusive to a department
, Rationale: Direct Costs are costs unique and exclusive to a
department.
Question 7
How is the Allocation Rate calculated?
A) "Dollars in the Cost Pool" + "Total Volume of Cost Driver"
B) "Dollars in the Cost Pool" / "Total Volume of Cost Driver"
C) "Total Volume of Cost Driver" / "Dollars in the Cost Pool"
D) "Dollars in the Cost Pool" - "Total Volume of Cost Driver"
E) "Dollars in the Cost Pool" * "Total Volume of Cost Driver"
Correct Answer: B) "Dollars in the Cost Pool" / "Total Volume of Cost
Driver"
Rationale: Allocation Rate = "Dollars in the Cost Pool" / "Total Volume
of Cost Driver".
Question 8
Effective cost drivers should have what characteristic(s)?
A) Increase organizational cost.
B) Promote organizational cost reduction.
C) Perceived as being unfair.
D) Have no impact on cost reduction.
E) Only track expenses.
Correct Answer: B) -Promote organizational cost reduction -Perceived
as being fair
Rationale: Effective cost drivers should promote organizational cost
reduction and be perceived as being fair.
Question 9
Which of the following is NOT a type of cost allocation method?
A) Direct Method.
B) Step-Down Method.
C) Reciprocal Method.
D) Step-Up Method.
MANAGEMENT MIDTERM | ALL QUESTIONS AND CORRECT
ANSWERS | ALREADY GRADED A+ | PROFESSOR VERIFIED
Question 1
What is the Cost Driver?
A) The overhead amount to be allocated.
B) The basis a cost pool will be allocated.
C) A department where costs are accumulated.
D) A cost unique and exclusive to a department.
E) A type of revenue.
Correct Answer: B) basis cost pool will be allocated
Rationale: Cost Driver is the basis a cost pool will be allocated.
Question 2
What is the Cost Pool?
A) The basis for cost allocation.
B) The overhead amount to be allocated.
C) A patient service department.
D) A direct cost.
E) A revenue center.
Correct Answer: B) overhead amount to be allocated
Rationale: Cost Pool is the overhead amount to be allocated.
Question 3
Overhead Departments are often called:
A) Revenue centers.
B) Patient service departments.
C) Cost centers.
D) Direct cost departments.
E) Profit centers.
Correct Answer: C) cost centers
Rationale: Overhead Departments are often called cost centers.
,Question 4
Indirect Costs are:
A) Costs unique and exclusive to a department.
B) Costs of shared resources used by the entire organization.
C) Costs directly traceable to a service.
D) Costs that vary with volume.
E) Costs that are easily assigned.
Correct Answer: B) Costs of shared resources used by the entire
organization
Rationale: Indirect Costs are costs of shared resources used by the
entire organization.
Question 5
Patient Service Departments are often called:
A) Cost centers.
B) Overhead departments.
C) Revenue centers.
D) Indirect cost departments.
E) Support departments.
Correct Answer: C) revenue centers
Rationale: Patient Service Departments are often called revenue
centers.
Question 6
Direct Costs are:
A) Costs of shared resources used by the entire organization.
B) Costs unique and exclusive to a department.
C) Costs allocated to multiple departments.
D) Always fixed costs.
E) Always variable costs.
Correct Answer: B) costs unique and exclusive to a department
, Rationale: Direct Costs are costs unique and exclusive to a
department.
Question 7
How is the Allocation Rate calculated?
A) "Dollars in the Cost Pool" + "Total Volume of Cost Driver"
B) "Dollars in the Cost Pool" / "Total Volume of Cost Driver"
C) "Total Volume of Cost Driver" / "Dollars in the Cost Pool"
D) "Dollars in the Cost Pool" - "Total Volume of Cost Driver"
E) "Dollars in the Cost Pool" * "Total Volume of Cost Driver"
Correct Answer: B) "Dollars in the Cost Pool" / "Total Volume of Cost
Driver"
Rationale: Allocation Rate = "Dollars in the Cost Pool" / "Total Volume
of Cost Driver".
Question 8
Effective cost drivers should have what characteristic(s)?
A) Increase organizational cost.
B) Promote organizational cost reduction.
C) Perceived as being unfair.
D) Have no impact on cost reduction.
E) Only track expenses.
Correct Answer: B) -Promote organizational cost reduction -Perceived
as being fair
Rationale: Effective cost drivers should promote organizational cost
reduction and be perceived as being fair.
Question 9
Which of the following is NOT a type of cost allocation method?
A) Direct Method.
B) Step-Down Method.
C) Reciprocal Method.
D) Step-Up Method.
