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MHA 706 4 questions and answers
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MHA 706 4 questions and answers
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MHA 706 4Patient Service Departments
Are often called revenue centers
Indirect Cost
Are cost associated with shared resources used by the entire organization
0:04
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0:30
Direct Costs
Are costs unique and exclusive to a department
Overhead departments
Are often called costs centers
Cost Pool
Is the overhead amount to be allocated
Cost Driver
Is the basis on which the cost pool will be allocated
When you divide the "Dollars in the Cost Pool" by "Total Volume of Cost Driver" what
have you determined?
Allocation Rate
What characteristics should a Effective cost drivers have?
Perceived as being fair,
Promote organizational cost reduction
Types of allocation methods.
Reciprocal Method, Step-Down Method, Direct 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?
Square footage of the department.
Once a company uses the direct method to allocate indirect costs to revenue-producing
departments within the facility - the total level of expenses decreases for the
organization. True or false?
False
When using the direct cost allocation system - often you are allocating the cost of ____
to Patient Service Departments.
Support (overhead) departments
What are accounting methods to account for "costs" at an individual service level?
Cost-to-Charge Ratio (CCR), Relative Value Unit (RVU), Activity Based Costing (ABC),
Time-Driven Activity Based Costing (TDABC)
What are the assumptions of the Cost to charge Ratio method?
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