LSUS MHA 706 FINAL EXAM: 200 HIGH-YIELD PRACTICE
QUESTIONS AND DETAILED RATIONALES FOR EXAM SUCCESS
(2026/2027 EDITION)
1. Which of the following best describes the primary purpose of
managerial accounting in a healthcare organization?
A. To provide financial information to external stakeholders like
investors and creditors.
B. To comply with Generally Accepted Accounting Principles (GAAP) for
tax reporting.
C. To provide internal management with relevant information for
planning, controlling, and decision-making.
D. To calculate the exact tax liability of the healthcare facility.
Correct Answer: C
Rationale: Managerial accounting focuses on internal users and
provides data for decision-making, planning, and control, unlike
financial accounting which serves external users and follows GAAP.
2. In a healthcare setting, which of the following is considered a
variable cost?
A. The cost of medical supplies used directly in patient care.
B. The salary of the hospital's Chief Financial Officer.
C. The monthly lease payment for the hospital building.
D. Annual property insurance premiums.
Correct Answer: A
Rationale: Variable costs change in direct proportion to the volume of
patients or services provided. Medical supplies increase as patient
volume increases.
,3. Which of the following is an example of a fixed cost for a hospital?
A. Nursing staff hired on an hourly basis.
B. Medications administered to patients.
C. Depreciation on the hospital's MRI machine.
D. Laundry services billed per pound.
Correct Answer: C
Rationale: Fixed costs remain constant in total regardless of patient
volume. Depreciation on expensive medical equipment is a classic fixed
cost.
4. What is the primary characteristic of a mixed cost?
A. It remains constant in total regardless of volume.
B. It contains both a fixed and a variable component.
C. It changes inversely with changes in volume.
D. It is only incurred when a specific service is performed.
Correct Answer: B
Rationale: Mixed costs (or semi-variable costs) have a fixed base
amount that is incurred regardless of activity, plus a variable
component that increases with activity (e.g., a physician's base salary
plus productivity bonus).
5. Which of the following best defines the contribution margin?
A. Total revenue minus total fixed costs.
B. Total revenue minus total variable costs.
C. Total revenue minus total operating expenses.
D. Total fixed costs divided by the selling price per unit.
Correct Answer: B
Rationale: Contribution margin is the amount remaining from sales
revenue after variable expenses have been deducted. It contributes
towards covering fixed expenses and generating profit.
,6. How is the break-even point in units calculated?
A. Total Fixed Costs / Contribution Margin per Unit.
B. Total Variable Costs / Selling Price per Unit.
C. Total Fixed Costs / Selling Price per Unit.
D. Total Revenue / Total Variable Costs.
Correct Answer: A
Rationale: The break-even point in units is determined by dividing the
total fixed costs by the contribution margin per unit. This tells the
organization how many units must be sold to cover all costs.
**7. A healthcare clinic has fixed costs of $50,000, a selling price per
patient visit of $100, and variable costs per visit of $60. What is the
break-even point in patient visits?**
A. 500 visits
B. 1,250 visits
C. 833 visits
D. 1,000 visits
Correct Answer: B
Rationale: Contribution margin per unit = $100 - $60 = $40. Break-even
point = $50,000 / $40 = 1,250 visits.
8. Which of the following describes the margin of safety?
A. The excess of budgeted or actual sales over the break-even volume.
B. The difference between total revenue and total fixed costs.
C. The ratio of variable costs to total sales.
D. The amount of profit generated after covering fixed costs.
Correct Answer: A
Rationale: The margin of safety measures how much sales can drop
before the organization incurs a loss. It is calculated as actual (or
budgeted) sales minus break-even sales.
, 9. In a healthcare organization, which of the following is an indirect
cost?
A. The salary of a staff nurse working in the ICU.
B. The cost of sutures used during a specific surgery.
C. The salary of the hospital's human resources director.
D. The cost of contrast dye used in a specific radiology procedure.
Correct Answer: C
Rationale: Indirect costs cannot be easily or conveniently traced to a
specific cost object (like a patient or department). The HR director's
salary supports the entire organization.
10. Which costing method assigns overhead costs to products or
services based on a single volume-based measure, such as direct labor
hours?
A. Activity-Based Costing (ABC).
B. Traditional Costing.
C. Process Costing.
D. Job Order Costing.
Correct Answer: B
Rationale: Traditional costing systems allocate overhead using a single,
volume-based allocation base, whereas ABC uses multiple cost drivers
to allocate overhead more accurately.
11. Which of the following is the primary benefit of using Activity-
Based Costing (ABC) in a hospital?
A. It is much simpler and cheaper to implement than traditional costing.
B. It eliminates the need for tracking direct costs.
C. It provides more accurate cost information by tracing overhead to
specific activities.
D. It complies with GAAP for external financial reporting.
QUESTIONS AND DETAILED RATIONALES FOR EXAM SUCCESS
(2026/2027 EDITION)
1. Which of the following best describes the primary purpose of
managerial accounting in a healthcare organization?
A. To provide financial information to external stakeholders like
investors and creditors.
B. To comply with Generally Accepted Accounting Principles (GAAP) for
tax reporting.
C. To provide internal management with relevant information for
planning, controlling, and decision-making.
D. To calculate the exact tax liability of the healthcare facility.
Correct Answer: C
Rationale: Managerial accounting focuses on internal users and
provides data for decision-making, planning, and control, unlike
financial accounting which serves external users and follows GAAP.
2. In a healthcare setting, which of the following is considered a
variable cost?
A. The cost of medical supplies used directly in patient care.
B. The salary of the hospital's Chief Financial Officer.
C. The monthly lease payment for the hospital building.
D. Annual property insurance premiums.
Correct Answer: A
Rationale: Variable costs change in direct proportion to the volume of
patients or services provided. Medical supplies increase as patient
volume increases.
,3. Which of the following is an example of a fixed cost for a hospital?
A. Nursing staff hired on an hourly basis.
B. Medications administered to patients.
C. Depreciation on the hospital's MRI machine.
D. Laundry services billed per pound.
Correct Answer: C
Rationale: Fixed costs remain constant in total regardless of patient
volume. Depreciation on expensive medical equipment is a classic fixed
cost.
4. What is the primary characteristic of a mixed cost?
A. It remains constant in total regardless of volume.
B. It contains both a fixed and a variable component.
C. It changes inversely with changes in volume.
D. It is only incurred when a specific service is performed.
Correct Answer: B
Rationale: Mixed costs (or semi-variable costs) have a fixed base
amount that is incurred regardless of activity, plus a variable
component that increases with activity (e.g., a physician's base salary
plus productivity bonus).
5. Which of the following best defines the contribution margin?
A. Total revenue minus total fixed costs.
B. Total revenue minus total variable costs.
C. Total revenue minus total operating expenses.
D. Total fixed costs divided by the selling price per unit.
Correct Answer: B
Rationale: Contribution margin is the amount remaining from sales
revenue after variable expenses have been deducted. It contributes
towards covering fixed expenses and generating profit.
,6. How is the break-even point in units calculated?
A. Total Fixed Costs / Contribution Margin per Unit.
B. Total Variable Costs / Selling Price per Unit.
C. Total Fixed Costs / Selling Price per Unit.
D. Total Revenue / Total Variable Costs.
Correct Answer: A
Rationale: The break-even point in units is determined by dividing the
total fixed costs by the contribution margin per unit. This tells the
organization how many units must be sold to cover all costs.
**7. A healthcare clinic has fixed costs of $50,000, a selling price per
patient visit of $100, and variable costs per visit of $60. What is the
break-even point in patient visits?**
A. 500 visits
B. 1,250 visits
C. 833 visits
D. 1,000 visits
Correct Answer: B
Rationale: Contribution margin per unit = $100 - $60 = $40. Break-even
point = $50,000 / $40 = 1,250 visits.
8. Which of the following describes the margin of safety?
A. The excess of budgeted or actual sales over the break-even volume.
B. The difference between total revenue and total fixed costs.
C. The ratio of variable costs to total sales.
D. The amount of profit generated after covering fixed costs.
Correct Answer: A
Rationale: The margin of safety measures how much sales can drop
before the organization incurs a loss. It is calculated as actual (or
budgeted) sales minus break-even sales.
, 9. In a healthcare organization, which of the following is an indirect
cost?
A. The salary of a staff nurse working in the ICU.
B. The cost of sutures used during a specific surgery.
C. The salary of the hospital's human resources director.
D. The cost of contrast dye used in a specific radiology procedure.
Correct Answer: C
Rationale: Indirect costs cannot be easily or conveniently traced to a
specific cost object (like a patient or department). The HR director's
salary supports the entire organization.
10. Which costing method assigns overhead costs to products or
services based on a single volume-based measure, such as direct labor
hours?
A. Activity-Based Costing (ABC).
B. Traditional Costing.
C. Process Costing.
D. Job Order Costing.
Correct Answer: B
Rationale: Traditional costing systems allocate overhead using a single,
volume-based allocation base, whereas ABC uses multiple cost drivers
to allocate overhead more accurately.
11. Which of the following is the primary benefit of using Activity-
Based Costing (ABC) in a hospital?
A. It is much simpler and cheaper to implement than traditional costing.
B. It eliminates the need for tracking direct costs.
C. It provides more accurate cost information by tracing overhead to
specific activities.
D. It complies with GAAP for external financial reporting.
