HEALTHCARE FINANCE QUIZ 4

Which of the following statements about managerial accounting is incorrect?Select one: a. Managerial accounting information is used primarily by managers within the organization. b. Managerial accounting information is prepared in accordance with rules established by outsiders (generally accepted accounting principles [GAAP]). c. Managerial accounting is primarily forward looking, as opposed to focusing on historical information. d. Managerial accounting information is used both at the organizational level and at the sub-unit (department) level. e. Budgets are an important managerial accounting tool. b. Managerial accounting information is prepared in accordance with rules established by outsiders (generally accepted accounting principles [GAAP]).
Which of the below statements about cost allocation is most correct?Select one: a. The direct method is conceptually best and least expensive to implement. b. The reciprocal method is most widely used in practice. c. The reciprocal method is conceptually best but typically the most expensive to implement. d. Both a. and b. above are correct. e. Both b. and c. above are correct. c. The reciprocal method is conceptually best but typically the most expensive to implement.
In general, the best way to allocate costs in a large organization is to assign all overhead expenses to a single cost pool with one cost driver. (T/F) FALSE
The relationship between costs and the volume of services provided is called cost behavior (or underlying cost structure). (T/F) TRUE
Which of the following statements about cost allocation is correct?Select one: a. The direct method of allocation recognizes services provided by support departments to one another. b. A cost driver is any grouping of overhead costs that must be allocated. c. The reciprocal method of allocation represents a compromise between the direct method and the step-down method. d. A cost pool is the total amount of direct costs incurred by one of the patient service departments. e. None of the above statements are correct. e. None of the above statements are correct.
Effective cost drivers should have which of the following characteristics?Select one: a. They should be perceived as being fair. b. They should create an incentive for cost reduction. c. They should create an allocation rate based on patient revenues. d. Both a. and b. above are correct. e. Both a. and c. above are correct. d. Both a. and b. above are correct.
The goal (purpose) of cost allocation is to assign all overhead costs to the activities (departments) that cause the costs to be incurred. (T/F) TRUE
Which of the following statements about activity based costing (ABC) is most correct?Select one: a. It uses a top down approach to cost allocation. b. It is most useful for assigning costs to departments. c. It is most useful for assigning costs to individual services. d. It is easy to apply because it ignores overhead costs. e. It is less costly to implement than traditional costing methods. c. It is most useful for assigning costs to individual services.
In economics, the situation in which average cost (per unit of output) declines as volume increases is known as economies of scope. (T/F) FALSE
Assume that Goodhealth Clinic has fixed costs of $1,000,000 and a total cost forecast of $1,500,000 at a volume of 20,000 patient visits. What is the clinic’s variable cost rate?Select one: a. $25 b. $20 c. $15 d. $10 e. $ 5 a. $25
The Housekeeping Department of Micanopy Hospital has direct costs of $500,000. The hospital’s four patient service departments utilize the following amounts of space:Department A 1,000 square feetDepartment B 2,000 square feetDepartment C 3,000 square feetDepartment D 4,000 square feetAssuming that the cost driver for housekeeping costs is the amount of occupied space, what is the allocation of housekeeping costs to Department A?Select one: a. $ 25,000 b. $ 50,000 c. $ 75,000 d. $100,000 e. $125,000 b. $ 50,000
The Housekeeping Department of Marshfield Clinic has direct costs of $1,000,000. The clinic’s four patient service departments utilize the following amounts of space:Department A 5,000 square feetDepartment B 10,000 square feetDepartment C 15,000 square feetDepartment D 20,000 square feetAssuming that the cost driver for housekeeping costs is the amount of occupied space, what is the allocation of housekeeping costs to Department B?Select one: a. $500,000 b. $400,000 c. $300,000 d. $200,000 e. $100,000 d. $200,000
Assume that Randal Clinic has fixed costs of $500,000 and a variable cost (per visit) rate of $20. What is the total cost forecast for a volume of 5,000 patient visits?Select one: a. $400,000 b. $500,000 c. $600,000 d. $700,000 e. $800,000 c. $600,000
Assume that Lexington Hospital has fixed costs of $10,000,000 and a variable cost (per inpatient day) rate of $200. What is the total cost forecast for a volume of 50,000 patient days?Select one: a. $12,500,000 b. $15,000,000 c. $17,500,000 d. $20,000,000 e. $25,000,000 d. $20,000,000

Leave a Reply

Your email address will not be published. Required fields are marked *