Exam (elaborations) mha 706

Indirect Costs - ANSAre costs associated with shared resources used by the entire organization Cost Driver - ANSIs the basis on which the cost pool will be allocated Cost Pool - ANSIs the overhead amount to be allocated Overhead departments - ANSAre often called costs centers Patient Service Departments - ANSAre often called revenue centers Direct Costs - ANSAre 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 .... - ANSThe Allocation Rate Effective cost drivers should have the following characteristic(s) - ANS-Perceived as being fair -Promote Organizational Cost Reduction Which of the following is NOT a type of allocation method. - ANSstep-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. - ANSSquare 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. - ANSFalse When using the direct cost allocation system - often you are allocating the cost of xxxx to Patient Service Departments - ANSSupport (overhead) departments Select all of the following options that are accounting methods to account for "costs" at an individual service level - ANSActivity 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. - ANSEach 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. - ANSIndividual 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: - ANSCollect- activity data for each service Identify- the relevant activities Estimate- the cost of each activity Assign- cost drivers for each activities Calculate- the total costs of the service by aggregating activity costs One use of managerial accounting information within a health service organization is to... - ANS-Determine the profitability of different service lines -Identify the lowest feasible price when prices are negotiated -Set prices on services