Saudi Electronic University

HCM 213

Chapter 12

Multiple Choice

1)Cost to charge ratio (CCR) is on the most common methods used by :

1. 1. Physicians
   2. Hospitals
   3. Dentists
   4. a & c
2. Costs to which payments is not directly attached include:
   1. Administration
   2. Patient care services
   3. Pharmacy Services
   4. Food Services

3. Which of the following is not a step for allocating indirect costs to service:
   1. Determine an allocation base and compile costs to service basic statistics
   2. Convert basic statistics while disregarding square feet and number of employees.
   3. Convert basic statistics for the step down approach
   4. Calculate allocation percentages
4. Activity based costing cost finding method:
   1. Allocates costs
   2. Uses static measures to determine costs
   3. Estimates costs of a service by measuring costs of activities it takes to produce a service.
   4. Determines cost of an object including both direct and indirect costs
5. Activity based costing is:
   1. Top down approach
   2. Bottom up approach
   3. Horizontal approach
   4. Vertical approach
6. The key terms used in costing include:
   1. Direct Cost
   2. Indirect Cost
   3. Cost Drive
   4. All of the above
7. In a step down cost finding method, the following areas are allocated:
   1. Utilities
   2. Laboratory
   3. Pediatric Services
   4. a & b
8. In the step down allocation method:
   1. Order in which services are allocated makes a difference in the final costs
   2. Allocation basis used to allocate costs makes a difference
   3. Number of centers to which costs are allocated makes a difference
   4. All of the above

9. Activity Based Costing is:
   1. A newer method
   2. An old established method
   3. Not used in healthcare
   4. None of the above
10. Which of the following is not a method to estimate costs:
    1. Step down method
    2. Activity ratio
    3. Cost to charge ratio
    4. Activity based costing

True or False

1. The step down method is a cost finding method. True or False?

2. Direct costs include payments not attached to a service. True or False?

3. An allocation base is a dynamic method of determining costs related to providing care. True or False?

4. Activity based costing is a step down method. True or False?

5. Traditional cost allocation is a top down approach. True or False?

6. A cost driver is that which causes a change in the cost of an activity. True or False?

7. Cost to charge ratio is based on assumed relationship of costs to charges. True or False?

8. Fully allocated cost includes both direct and all other costs allocated. True or False?