HFMA Test Part 1 Exam Questions and
Answers with Verified Solutions | Latest
Updated 2026
Definition of cost Can be the amount paid for the service. It
can also
be the amount paid for salaries or to other
vendors
Direct Cost Are the costs that can be traced directly to
a
department, product, or service (Salaries,
Employee benefits, medications, supplies,
aging
and equipment maintenance contract
Direct cost in a health Plan Would be the actual claims payments
made by the
plan on behalf of its members
indirect costs Are the cost necessary to operate the
business that
are not incurred in the provison of products
or
services
,Over Head Cost Salaries paid to executives, support
services
(laundry, cafeteria, business office,
medical records
and accounting. Facility Operating cost,
such as
maintenance security or utilities.
Variable Cost Correlate directly with the volume or
service
provided.
Fixed Cost Stay the same regardless of patient
volume
Total Cost Sum of variable and fixed costs
Semi-fixed cost Cost that show the behavior of a variable
cost
increase with volume it starts at a level
above 0.
(Equipment maintenance that is paid a fix
amount
plus additional amount per unit service
Step Variable cost Cost that remains fixed over a finite level
of volume
and then increase incrementally at higher
volume
levels
, Cost allocation is a process by which indirect costs are
assigned to
a part of the organization that actually
provides
services to a patient or client.
Revenue Producing Directed services providing areas.
Non-revenue/overhead Area that incure cost
department
Step Down Approach Considers that interrelationships between
overhead departments ( Administration to
Housekeeping to Peds)
Direct allocation Housekeeping to adults, administration,
accounting...)
Direct and Step-down approaches Are effective in estimating costs at a high
level,
such as, within an entire clinic, hospital or
a
department within the organization
Activity - Based Costing (ABC) is a bottom-up or micro costing approach
in
contrast to an allocation driver, top-down
costing
method used on the medical cost report
Answers with Verified Solutions | Latest
Updated 2026
Definition of cost Can be the amount paid for the service. It
can also
be the amount paid for salaries or to other
vendors
Direct Cost Are the costs that can be traced directly to
a
department, product, or service (Salaries,
Employee benefits, medications, supplies,
aging
and equipment maintenance contract
Direct cost in a health Plan Would be the actual claims payments
made by the
plan on behalf of its members
indirect costs Are the cost necessary to operate the
business that
are not incurred in the provison of products
or
services
,Over Head Cost Salaries paid to executives, support
services
(laundry, cafeteria, business office,
medical records
and accounting. Facility Operating cost,
such as
maintenance security or utilities.
Variable Cost Correlate directly with the volume or
service
provided.
Fixed Cost Stay the same regardless of patient
volume
Total Cost Sum of variable and fixed costs
Semi-fixed cost Cost that show the behavior of a variable
cost
increase with volume it starts at a level
above 0.
(Equipment maintenance that is paid a fix
amount
plus additional amount per unit service
Step Variable cost Cost that remains fixed over a finite level
of volume
and then increase incrementally at higher
volume
levels
, Cost allocation is a process by which indirect costs are
assigned to
a part of the organization that actually
provides
services to a patient or client.
Revenue Producing Directed services providing areas.
Non-revenue/overhead Area that incure cost
department
Step Down Approach Considers that interrelationships between
overhead departments ( Administration to
Housekeeping to Peds)
Direct allocation Housekeeping to adults, administration,
accounting...)
Direct and Step-down approaches Are effective in estimating costs at a high
level,
such as, within an entire clinic, hospital or
a
department within the organization
Activity - Based Costing (ABC) is a bottom-up or micro costing approach
in
contrast to an allocation driver, top-down
costing
method used on the medical cost report
