HCA 502 Final Exam Graded A+
A decrease in the number of patients treated should create - ANSWER-An unfavorable
revenue variance and a favorable expense variance
A Pareto diagram:
Displays the important causes of variation
Uses data collected about such causes of variation
Typically reinforces the idea that a small number of cases cause the most problems
All of these are correct - ANSWER-All of these are correct
Assume actual output is lower than forecasted. Under an incremental budget: -
ANSWER-The budget would be unchanged, but all variable expenses in a flexible
budget would be reduced
Assume you work in a hospital that has an operating margin of 4.0%. If the industry
average is 3.8% and the 75th percentile is 9.1%, you can say: - ANSWER-Your
organization performs better than 50% of all hospitals
Common bases for the allocation of indirect expenses include: - ANSWER-Direct
Expenses, Revenue, and Services Delivered
Cross Creek Clinic has revenue totaling $200,000. The clinic has costs totaling
$100,000; 60% is variable costs and 40% is fixed cost. What is the clinic's contribution
margin, expressed in dollars? - ANSWER-$140,000
Depreciation expense: - ANSWER-Reduces net income and increases the reserve for
depreciation
Describe regulatory requirements that affect staffing - ANSWER-Regulatory
requirements that affect staffing include the IMPACT Act which regulates nursing home
staffing levels, the Affordable Care Act mandating the reporting of nursing home staffing
levels, the state certificate-of-need (CON) laws which define a sufficient staff statment,
staff requirements, and direct care requirements
Describe the behavior of fixed, variable, semi variable, and semi fixed costs - ANSWER-
Fixed costs are costs that do not vary in total when activity levels (or volume) of
operations change. This means that these costs will incur no matter the output of group.
For example, rent payments will always be due no matter how many units sold. Variable
costs increase and decrease in direct porportion to changes in activity levels (or
volume) of operation. In order to produce a product there is a cost due to things like
wage and materials per product. Semivariable costts vary with the activity levels (or
, volume) of operations, but not in direct proportion. For example, If costs increases for
output based on every two units of measurement. Semifixed costs have a fixed and
variable component. For example, staff wages are fixed unless the staff works overtime
in which the cost would become semifixed due to the payment of a time and a half over
the fixed costs.
Describe the difference between an incremental and flexible operating budget and when
each should be used - ANSWER-The difference between an incremental and flexible
operating budget is that increment budgets are based on forecasted output and do not
change if actual budget year output differs from the forcase, while flexible budgets
create a preliminary budget based on forecasted output and are flexed at the end of a
budget period when actual output is know. Incremental budgets should be used when
managers expect little change between the current year and the budget year. Flexible
budgets should be used when forecasts are expected to change and difficult to obtain
Describe the difference between productive time and nonproductive time - ANSWER-
Productive time is the amount of employees net hours on duty performing tasks and
functions related to their job description. Nonproductive time is employee paid time
when the employee is not doing duties related to the job description which includes
vacation, sick time, holidays, and personal days.
Describe the differences between payback period, net present value, and internal rate
of return - ANSWER-The differences between payback period, net present value, and
internal rate of return are that payback period is based on cash flow (difference between
inflow and outflow), net present value is the discounted cash flow that takes all of the
cash (incoming and out coming) into account over the life of the asset and incorporates
the time value of money, and the internal rate of return is another discounted cash flow
method but it reports the interest rate that equalizes the cash inflows to the investment
(the compound interest rate earned on an investment
Describe the different types of capital expenditures and how they affect the capital
expenditure analysis - ANSWER-The different types of capital expenditures are
acquiring new equipment, upgrading new equipment, replacing existing equipment with
new equipment, funding new programs, funding expansion of existing programs, and
acquiring capital assets for future use. They affect the capital expenditure analysis
because it helps managers determine if an expenditure is attainable prior to purchase.
Describe the elements that determine an employees gross earnings and net pay -
ANSWER-The elements that determine an employees gross earnings and net pay
include base hourly rate, benefits (vacation, health insurance, retirement, etc.), taxes
(state income tax, payroll tax), overtime, etc.
Describe the idea behind the Pareto rule - ANSWER-The idea behind the Pareto rule is
the pareto principle that states that 80% of events arise from 20% the potential causes.
A decrease in the number of patients treated should create - ANSWER-An unfavorable
revenue variance and a favorable expense variance
A Pareto diagram:
Displays the important causes of variation
Uses data collected about such causes of variation
Typically reinforces the idea that a small number of cases cause the most problems
All of these are correct - ANSWER-All of these are correct
Assume actual output is lower than forecasted. Under an incremental budget: -
ANSWER-The budget would be unchanged, but all variable expenses in a flexible
budget would be reduced
Assume you work in a hospital that has an operating margin of 4.0%. If the industry
average is 3.8% and the 75th percentile is 9.1%, you can say: - ANSWER-Your
organization performs better than 50% of all hospitals
Common bases for the allocation of indirect expenses include: - ANSWER-Direct
Expenses, Revenue, and Services Delivered
Cross Creek Clinic has revenue totaling $200,000. The clinic has costs totaling
$100,000; 60% is variable costs and 40% is fixed cost. What is the clinic's contribution
margin, expressed in dollars? - ANSWER-$140,000
Depreciation expense: - ANSWER-Reduces net income and increases the reserve for
depreciation
Describe regulatory requirements that affect staffing - ANSWER-Regulatory
requirements that affect staffing include the IMPACT Act which regulates nursing home
staffing levels, the Affordable Care Act mandating the reporting of nursing home staffing
levels, the state certificate-of-need (CON) laws which define a sufficient staff statment,
staff requirements, and direct care requirements
Describe the behavior of fixed, variable, semi variable, and semi fixed costs - ANSWER-
Fixed costs are costs that do not vary in total when activity levels (or volume) of
operations change. This means that these costs will incur no matter the output of group.
For example, rent payments will always be due no matter how many units sold. Variable
costs increase and decrease in direct porportion to changes in activity levels (or
volume) of operation. In order to produce a product there is a cost due to things like
wage and materials per product. Semivariable costts vary with the activity levels (or
, volume) of operations, but not in direct proportion. For example, If costs increases for
output based on every two units of measurement. Semifixed costs have a fixed and
variable component. For example, staff wages are fixed unless the staff works overtime
in which the cost would become semifixed due to the payment of a time and a half over
the fixed costs.
Describe the difference between an incremental and flexible operating budget and when
each should be used - ANSWER-The difference between an incremental and flexible
operating budget is that increment budgets are based on forecasted output and do not
change if actual budget year output differs from the forcase, while flexible budgets
create a preliminary budget based on forecasted output and are flexed at the end of a
budget period when actual output is know. Incremental budgets should be used when
managers expect little change between the current year and the budget year. Flexible
budgets should be used when forecasts are expected to change and difficult to obtain
Describe the difference between productive time and nonproductive time - ANSWER-
Productive time is the amount of employees net hours on duty performing tasks and
functions related to their job description. Nonproductive time is employee paid time
when the employee is not doing duties related to the job description which includes
vacation, sick time, holidays, and personal days.
Describe the differences between payback period, net present value, and internal rate
of return - ANSWER-The differences between payback period, net present value, and
internal rate of return are that payback period is based on cash flow (difference between
inflow and outflow), net present value is the discounted cash flow that takes all of the
cash (incoming and out coming) into account over the life of the asset and incorporates
the time value of money, and the internal rate of return is another discounted cash flow
method but it reports the interest rate that equalizes the cash inflows to the investment
(the compound interest rate earned on an investment
Describe the different types of capital expenditures and how they affect the capital
expenditure analysis - ANSWER-The different types of capital expenditures are
acquiring new equipment, upgrading new equipment, replacing existing equipment with
new equipment, funding new programs, funding expansion of existing programs, and
acquiring capital assets for future use. They affect the capital expenditure analysis
because it helps managers determine if an expenditure is attainable prior to purchase.
Describe the elements that determine an employees gross earnings and net pay -
ANSWER-The elements that determine an employees gross earnings and net pay
include base hourly rate, benefits (vacation, health insurance, retirement, etc.), taxes
(state income tax, payroll tax), overtime, etc.
Describe the idea behind the Pareto rule - ANSWER-The idea behind the Pareto rule is
the pareto principle that states that 80% of events arise from 20% the potential causes.
