LSUS MHA 706 FINAL – LORD Questions
and Answers 2026 Update
Cost Driver is the... - Correct Answers ✅basis cost pool will
be allocated
Cost Pool is the... - Correct Answers ✅overhead amount to
be allocated
Overhead Departments are... - Correct Answers ✅often
called cost centers
Indirect Costs - Correct Answers ✅Costs of shared
resources used by the entire organization
Patient Service Departments are... - Correct Answers
✅often called revenue centers
Direct Costs are... - Correct Answers ✅costs unique and
exclusive to a department
"Dollars in the Cost Pool" / "Total Volume of Cost Driver" = -
Correct Answers ✅Allocation Rate
Effective cost drivers should have what characteristics(s)? -
Correct Answers ✅-Promote organizational cost reduction
-Perceived as being fair
,LSUS MHA 706 FINAL – LORD Questions
and Answers 2026 Update
__________ is NOT a type of allocation method? - Correct
Answers ✅Step-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? - Correct Answers ✅-
Square footage of the department
-Housekeeping
TRUE/FALSE: Once a company uses the Direct Method to
allocate costs to revenue-producing departments within the
facility - the total level of expenses decreases for the
organization. - Correct Answers ✅False
When using the direct cost allocation system - often you are
allocating the cost of __________ to Patient Service
Departments. - Correct Answers ✅Support (overhead)
Departments
__________ are accounting methods to account for "cost" at an
individual service level. - Correct Answers ✅Time Driven-
Costing (TDBC)
Activity Based Costing (ABC)
Cost-to-Charge Ratio (CCR)
Relative Value (RVU)
, LSUS MHA 706 FINAL – LORD Questions
and Answers 2026 Update
__________ are true assumption(s) of the Cost-to-Charge Ratio
Method. - Correct Answers ✅Each 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 _________ that
comprise the service provided. - Correct Answers
✅Individual Activities
Calculate... - Correct Answers ✅total costs of the service
by aggregating activity costs
Estimate... - Correct Answers ✅cost of each activity
Collect... - Correct Answers ✅activity data for each service
Identify... - Correct Answers ✅the relevant activities
Assign... - Correct Answers ✅cost drivers for each activity
and Answers 2026 Update
Cost Driver is the... - Correct Answers ✅basis cost pool will
be allocated
Cost Pool is the... - Correct Answers ✅overhead amount to
be allocated
Overhead Departments are... - Correct Answers ✅often
called cost centers
Indirect Costs - Correct Answers ✅Costs of shared
resources used by the entire organization
Patient Service Departments are... - Correct Answers
✅often called revenue centers
Direct Costs are... - Correct Answers ✅costs unique and
exclusive to a department
"Dollars in the Cost Pool" / "Total Volume of Cost Driver" = -
Correct Answers ✅Allocation Rate
Effective cost drivers should have what characteristics(s)? -
Correct Answers ✅-Promote organizational cost reduction
-Perceived as being fair
,LSUS MHA 706 FINAL – LORD Questions
and Answers 2026 Update
__________ is NOT a type of allocation method? - Correct
Answers ✅Step-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? - Correct Answers ✅-
Square footage of the department
-Housekeeping
TRUE/FALSE: Once a company uses the Direct Method to
allocate costs to revenue-producing departments within the
facility - the total level of expenses decreases for the
organization. - Correct Answers ✅False
When using the direct cost allocation system - often you are
allocating the cost of __________ to Patient Service
Departments. - Correct Answers ✅Support (overhead)
Departments
__________ are accounting methods to account for "cost" at an
individual service level. - Correct Answers ✅Time Driven-
Costing (TDBC)
Activity Based Costing (ABC)
Cost-to-Charge Ratio (CCR)
Relative Value (RVU)
, LSUS MHA 706 FINAL – LORD Questions
and Answers 2026 Update
__________ are true assumption(s) of the Cost-to-Charge Ratio
Method. - Correct Answers ✅Each 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 _________ that
comprise the service provided. - Correct Answers
✅Individual Activities
Calculate... - Correct Answers ✅total costs of the service
by aggregating activity costs
Estimate... - Correct Answers ✅cost of each activity
Collect... - Correct Answers ✅activity data for each service
Identify... - Correct Answers ✅the relevant activities
Assign... - Correct Answers ✅cost drivers for each activity
