LSUS MHA 706 FINAL Exam Questions with Complete Solutions Graded A+

1. Cost Driver is the... Answer: basis cost pool will be allocated 2. Cost Pool is the... Answer: overhead amount to be allocated 3. Overhead Departments are... Answer: often called cost centers 4. Indirect Costs Answer: Costs of shared resources used by the entire organization 5. Patient Service Departments are... Answer: often called revenue centers 6. Direct Costs are... Answer: costs unique and exclusive to a department 7. "Dollars in the Cost Pool" / "Total Volume of Cost Driver" = Answer: Allocation Rate 8. Effective cost drivers should have what characteristics(s)? Answer: -Promote orga- nizational cost reduction -Perceived as being fair 9. is NOT a type of allocation method? Answer: Step-Up Method 10. 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? Answer: -Square footage of the department -Housekeeping 11. TRUE/FALSE Answer: 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. Answer: False 12. When using the direct cost allocation system - often you are allocating the cost of to Patient Service Departments. Answer: Support (overhead) Departments 13. are accounting methods to account for "cost" at an individual service level. Answer: Time Driven-Costing (TDBC) Activity Based Costing (ABC) Cost-to-Charge Ratio (CCR) Relative Value (RVU) 14. are true assumption(s) of the Cost-to-Charge Ratio Method. Answer: - 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. 15. Activity Based Costing (ABC) begins with that comprise the service provided. Answer: Individual Activities 16. Calculate... Answer: total costs of the service by aggregating activity costs 17. Estimate... Answer: cost of each activity 18. Collect... Answer: activity data for each service 19. Identify... Answer: the relevant activities 20. Assign... Answer: cost drivers for each activity 21. One use of managerial accounting information within a health service organization is to.... Answer: -Set prices on services -Identify the lowest feasible price when prices are negotiated -Determine the profitability of different service lines 22. When a provider has market dominance, and can set its own prices (within reason), it is said to be a price setter. In other situations, providers are price takers. may describe a situation where a provider is a "price taker." Answer: There is a payer dominance It is a perfectly competitive market The provider is dealing with a government payer/program 23. Under marginal cost pricing, prices for a service are set to cover costs. Answer: incremental 24. To break-even, revenues Answer: must equal total costs 25. Target costing is used by Answer: price takers 26. Capitation rates are quoted Answer: per member per month basis 27. Scenario analysis Answer: is technique in which alternative scenarios are analyzed 28. The interest rate is described as the on a debt security. Answer: cost of capital 29. Subordinated debenture bonds Debenture bonds Mortgage bonds Answer: "Corporate" bond types 30. Bond contracts typically contain.... Answer: Trustee designation Interest rate and type Maturity agreements Restrictive covenant 31. This is the institution that will ensure that the bond-holder's rights are respected (usually financial designation). Answer: Trustee designation 32. This typically falls under a 'general provision' portion of the contract when the bond return is discussed. Answer: Interest rate and type 33. This typically falls under a 'general provisions' portion of the contract where a bond will mature. Answer: Maturity agreements 34. This relates to one of the some restrictions that the organization may have to abide by. This is typically related to some sort of minimum financial conditions. Answer: Restrictive covenant 35. Call Provisions... Answer: permit borrower to redeem the debt prior to maturity 36. Interest Rate... Answer: is the bond's required rate of return 37. The financial value of an asset stems. from the asset's expected cash flow. 38. Debt Ratings... Answer: reflect the probability of default 39. Nothing... Answer: is riskless! Remember that any investment has risk.