Question 1

Variable costs vary per unit over the relevant range.

Accepted Answer

A) True 
 B)False  False

Question 2

After comparing the product margins between the make-or-buy alternatives the alternative with the higher product margin should be chosen.

Accepted Answer

A) True 
 B)False  True

Question 3

In healthcare target costing usually involves the provider as the price setter and the government as the price taker.

Accepted Answer

A) True 
 B)False  False

Question 4

Per unit contribution margin= per unit revenues - ______________.

Accepted Answer

A)  Variable cost 
B)  Total fixed cost 
C)  Per unit variable cost 
D)  Per unit fixed cost 
A)  Variable cost 
B)  Total fixed cost 
C)  Per unit variable cost 
D)  Per unit fixed cost

Question 5

Break-even point is where total revenues equal total _____________.

Accepted Answer

A)  Expected cash flows 
B)  Total costs 
C)  Industry averages 
D)  CEO's salary 
A)  Expected cash flows 
B)  Total costs 
C)  Industry averages 
D)  CEO's salary

Question 6

A break-even chart shows the break-even point.

Accepted Answer

A) True 
 B)False

Question 7

Additional costs incurred solely as a result of an action or activity or a particular set of actions or activities are ___________________.

Accepted Answer

A)  Incurred costs 
B)  Incremental costs 
C)  Infallible costs 
D)  Incredible costs 
A)  Incurred costs 
B)  Incremental costs 
C)  Infallible costs 
D)  Incredible costs

Question 8

If an existing service has a negative product margin, it should not be dropped.

Accepted Answer

A) True 
 B)False

Question 9

Controlling costs or decreasing profit margins to meet or beat a predetermined price or reimbursement rate is ___________________.

Accepted Answer

A)  Transfer cost pricing 
B)  Variable costing 
C)  Targeted pricing 
D)  Target costing 
A)  Transfer cost pricing 
B)  Variable costing 
C)  Targeted pricing 
D)  Target costing

Question 10

Product margin is calculated by this equation: total contribution margin - avoidable fixed costs.

Accepted Answer

A) True 
 B)False

Question 11

Total contribution margin is total revenues - ________________.

Accepted Answer

A)  Total fixed costs 
B)  Total units 
C)  Fixed variable costs 
D)  Total variable costs 
A)  Total fixed costs 
B)  Total units 
C)  Fixed variable costs 
D)  Total variable costs

Question 12

Common costs benefit__________________.

Accepted Answer

A)  Everyone in an organization 
B)  No one 
C)  A select few 
D)  None of the above 
A)  Everyone in an organization 
B)  No one 
C)  A select few 
D)  None of the above

Question 13

Relevant range is the range of activity over which total fixed costs or per unit variable cost __________.

Accepted Answer

A)  Vary 
B)  Do not vary 
C)  Always vary 
D)  Can vary 
A)  Vary 
B)  Do not vary 
C)  Always vary 
D)  Can vary

Question 14

Total Revenues can be calculated using the formula: Total Revenues = Price x ___________.

Accepted Answer

A)  Quality 
B)  Quantified 
C)  Quantity 
D)  Quagmire 
A)  Quality 
B)  Quantified 
C)  Quantity 
D)  Quagmire

Question 15

In a make-or-buy decision buying is always the better alternative.

Accepted Answer

A) True 
 B)False

Question 16

Product margin = total contribution margin - __________________.

Accepted Answer

A)  Voided fixed costs 
B)  Avoidable fixed costs 
C)  Fixed costs 
D)  Total variable costs 
A)  Voided fixed costs 
B)  Avoidable fixed costs 
C)  Fixed costs 
D)  Total variable costs

Question 17

Incremental costs are always unforeseen.

Accepted Answer

A) True 
 B)False

Question 18

The basic break-even equation is: price x volume= variable cost per unit + (fixed cost x volume).

Accepted Answer

A) True 
 B)False

Question 19

Major error(s) that must be avoided when using fixed cost information to make decisions are:

Accepted Answer

A)  Using fixed costs per unit derived at all levels to forecast costs 
B)  Assuming that cost per unit does not change when volume changes 
C)  Both a & b 
D)  None of the above 
A)  Using fixed costs per unit derived at all levels to forecast costs 
B)  Assuming that cost per unit does not change when volume changes 
C)  Both a & b 
D)  None of the above

Variable costs vary per unit over the relevant range.

After comparing the product margins between the make-or-buy alternatives the alternative with the higher product margin should be chosen.

In healthcare target costing usually involves the provider as the price setter and the government as the price taker.

Per unit contribution margin= per unit revenues - ______________.

Break-even point is where total revenues equal total _____________.

A break-even chart shows the break-even point.

Additional costs incurred solely as a result of an action or activity or a particular set of actions or activities are ___________________.

If an existing service has a negative product margin, it should not be dropped.

Controlling costs or decreasing profit margins to meet or beat a predetermined price or reimbursement rate is ___________________.

Product margin is calculated by this equation: total contribution margin - avoidable fixed costs.

Total contribution margin is total revenues - ________________.

Common costs benefit__________________.

Relevant range is the range of activity over which total fixed costs or per unit variable cost __________.

Total Revenues can be calculated using the formula: Total Revenues = Price x ___________.

In a make-or-buy decision buying is always the better alternative.

Product margin = total contribution margin - __________________.

Incremental costs are always unforeseen.

The basic break-even equation is: price x volume= variable cost per unit + (fixed cost x volume).

Major error(s) that must be avoided when using fixed cost information to make decisions are:

The Context of Health Care Financial Management

Health Care Financial Statements

Principles and Practices of Health Care Accounting

Financial Statement Analysis

Working Capital Management

The Time Value of Money

The Investment Decision

Capital Financing for Health Care Providers

Budgeting

Responsibility Accounting

Provider Costfinding Methods

Provider Payment Systems

Filters

Exam 9: Using Cost Information to Make Special Decisions

Variable costs vary per unit over the relevant range.

After comparing the product margins between the make-or-buy alternatives the alternative with the higher product margin should be chosen.

In healthcare target costing usually involves the provider as the price setter and the government as the price taker.

Per unit contribution margin= per unit revenues - ______________.

Break-even point is where total revenues equal total _____________.

A break-even chart shows the break-even point.

Additional costs incurred solely as a result of an action or activity or a particular set of actions or activities are ___________________.

If an existing service has a negative product margin, it should not be dropped.

Controlling costs or decreasing profit margins to meet or beat a predetermined price or reimbursement rate is ___________________.

Product margin is calculated by this equation: total contribution margin - avoidable fixed costs.

Total contribution margin is total revenues - ________________.

Common costs benefit__________________.

Relevant range is the range of activity over which total fixed costs or per unit variable cost __________.

Total Revenues can be calculated using the formula: Total Revenues = Price x ___________.

In a make-or-buy decision buying is always the better alternative.

Product margin = total contribution margin - __________________.

Incremental costs are always unforeseen.

The basic break-even equation is: price x volume= variable cost per unit + (fixed cost x volume).

Major error(s) that must be avoided when using fixed cost information to make decisions are:

The Context of Health Care Financial Management

Health Care Financial Statements

Principles and Practices of Health Care Accounting

Financial Statement Analysis

Working Capital Management

The Time Value of Money

The Investment Decision

Capital Financing for Health Care Providers

Budgeting

Responsibility Accounting

Provider Costfinding Methods

Provider Payment Systems

Filters