HFMA EXAM 1 Questions with Correct Answers
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 department
Area that incure cost
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
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 department
Area that incure cost
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
