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QUESTION 1 If revenues are $5000, fixed costs are $2000, and profit is $1000, how much is variable cost?

QUESTION 1
  1. If revenues are $5000, fixed costs are $2000, and profit is $1000, how much is variable cost?
    1. $1000
    2. $2,000
    3. $3,000
    4. None of the above

1 points   


QUESTION 2
  1. Assuming revenue per procedure is $100, fixed costs are $200,000 and variable costs per procedure is $75, what is break even volume?

    1.

    2,000

    2.

    2,667

    3.

    8,000

    4.

    None of the above

1 points   


QUESTION 3
  1. Using the direct method of allocation, assume an overhead department has $100,000 in expenses, there are two revenue producing departments, Dept A and Dept B, and costs are allocated based on number of patient visits. Dept A has 4,000 visits and Dept B has 6,000 visits. How much of the overhead department expense is allocated to Dept A?

    1.

    $20,000

    2.

    $40,000

    3.

    $60,000

    4.

    None of the above

1 points   


QUESTION 4
  1. Assume you are starting a new service with the following relevant data What must your price per procedure be in order to make $10,000 in profit?
    Variable cost per procedure - $15
    Fixed Costs - $20,000
    Overhead Allocation - $5,000
    Expected procedure volume - 5,000

    1.

    $6

    2.

    $7

    3.

    $21

    4.

    $22

1 points   


QUESTION 5
  1. Your clinic has fixed costs of $1,000,000, an average variable cost of $15 per visit, one contract with a HMO where you are paid on a capitated basis. Your contract pays you $15 per member per month and you have 12,000 members. Each member comes into the clinic 2 times per year. How much money are you making (losing)?

    1.

    $2,160,000

    2.

    $1,160,000

    3.

    $800,000

    4.

    None of the above.

1 points   


QUESTION 6
  1. If you wanted to allocate the costs of a maintenance department which of the following would most likely be the best cost driver?

    1.

    Labor hours

    2.

    Machine hours

    3.

    Production volume

    4.

    Management estimate

1 points   


QUESTION 7
  1. All of the following are distinct characteristics of insurance, except:

    1.

    Pooling of losses

    2.

    Payment only for random losses

    3.

    Risk transfer

    4.

    Guaranteed profit

1 points   


QUESTION 8
  1. A dedicated full-time nurse working exclusively to support a physician in his office is an example of which type of an expense?

    1.

    Fixed - Direct

    2.

    Fixed - Indirect

    3.

    Variable - Direct

    4.

    Variable - Indirect

1 points   


QUESTION 9
  1. Which of the following is true?

    1.

    Sunk costs are costs that can be ignored when performing breakeven analysis

    2.

    Marginal costs are the change in costs related to the production of one more unit

    3.

    Direct expenses are always controllable.

    4.

    None of the above.

1 points   


QUESTION 10
  1. Which of the following is not required to allocate costs?

    1.

    Accounting system

    2.

    Cost center identification

    3.

    Workload statistic / cost driver

    4.

    None of the above

1 points   


QUESTION 11
  1. Which method of allocating costs ignores non-revenue to non-revenue and revenue-to-revenue cost center allocations?

    1.

    Direct

    2.

    Step-down

    3.

    Double

    4.

    None of the above

1 points   


QUESTION 12
  1. Which method of costing may be easier and provide clearer results when most data elements and assumptions are the same between two alternative products / services?

    1.

    Full costing

    2.

    Differential (incremental) costing

    3.

    a & b

    4.

    None of the above

1 points   


QUESTION 13
  1. Which of the following costing methods is based on charges?

    1.

    RCC (ratio of costs to charges)

    2.

    Process costing

    3.

    Job-order costing

    4.

    Activity-based costing

1 points   


QUESTION 14
  1. Which of the following is not true about appropriate cost drivers?

    1.

    Highly correlated with the actual amount of services used

    2.

    Perceived as fair

    3.

    Promote organizational cost reductions

    4.

    None of the above

1 points   


QUESTION 15
  1. Which of the following is a characteristic of the market as experienced by a price setter?

    1.

    Perfectly competitive market

    2.

    Payer dominance

    3.

    Government programs

    4.

    The company has a dominant share in the market

1 points   


QUESTION 16
  1. Which of the following is not an example of price subsidization or cost shifting?

    1.

    Medicare reimbursement is below the cost of organization yet the organization still makes a profit from its other payors.

    2.

    In order to attract business a hospital offers its services at a marginal cost rate.

    3.

    A single payor dominates the market and forces healthcare providers to accept below cost reimbursement. The healthcare providers charge other less dominate payors higher rates to compensate.

    4.

    None of the above

1 points   


QUESTION 17
  1. What is not a reason to use a budget?

    1.

    To facilitate planning

    2.

    To communicate expected financial performance

    3.

    To control expenses by monitoring expected costs versus actual

    4.

    None of the above

1 points   


QUESTION 18
  1. Which comes first in developing a budget?

    1.

    Revenue forecast

    2.

    Expense projections

    3.

    Volume estimates

    4.

    Expenses categorized into fixed vs. variable

1 points   


QUESTION 19
  1. Adverse selection is a major concern in health insurance.  Adverse selection

    occurs when:

    Individuals and businesses are more inclined to purchase insurance than those who are less

    likely to have claims.

    Insurance companies select people with adverse conditions, knowing that

    they will want to buy insurance.

    Buyers of insurance policies select adverse policies, due

    to a lack of information.

    Insurance companies market their policies only to the healthiest consumers.

1 points   


QUESTION 20
  1. Choose the most accurate answer:

    Medicare Part A covers prescription drugs and Medicare Part B provides hospital and some skilled nursing coverage

    Medicare Part A is free to all individuals eligible for Social Security benefits

    Medicare Part A provides hospital and some skilled nursing facility coverage

    Medicare Part B excludes physician services


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