1. Question : (TCO 4) Which of the following is part of a statistics budget?
Student Answer: Output expectations
Responsibility for estimation
All of the above
2. Question : (TCO 4) The following is an example of a _____________ budget:
“The budget for the radiology department is different at 90 percent occupancy than at 80 percent occupancy.”
Student Answer: rolling
3. Question : (TCO 4) Effectiveness is a relationship between:
Student Answer: Outputs and organizational goals
Inputs and outputs
Inputs and organizational goals
None of the above.
4. Question : (TCO 3) What is the main reason that relative value units (RVUs) often are used in health care?
Student Answer: Not all standard units show up in a standard treatment protocol.
RVUs enable more accurate pricing.
RVUs are the optimal way to estimate the costs of the resources consumed by cost objects such as products and customers.
Some departments or cost centers may have large numbers of outputs, which make individual costing very time consuming and expensive.
5. Question : (TCO 3) Your controller has told you that the marginal profit of DRG 209 (major joint procedure) for a Medicare patient exceeds the marginal profit for an average charge patient. Why might this occur?
Student Answer: High fixed costs of treatment
Low Medicare payment
6. Question : (TCO 2) The heading of every financial statement should contain the:
Student Answer: name, title, and place of business
name, title, and specific date of statement
title, name, type of ownership, and unit of measurement
title of statement, name of entity, and unit of measurement
name, title, specific date of statement, and unit of measurement
7. Question : (TCO 2) Which of the following is the BEST example of a financial metric?
Student Answer: Degree of innovation
Accreditation by the Joint Commission on Accreditation of Healthcare Organizations
Length of stay
1. Question : (TCO 4) Formulate your answer based on the below information. Costs per case increased to $4,900 from a budgeted value of $4,750. This increased actual total costs by what amount?
You have been asked by management to explain the variances in costs under your inpatient capitated contract. The following data is provided. Use the following data to calculate the variances.
Inpatient Costs $12,568,500 $16,618,350
Members 42,000 42,000
Admission Rate 0.070 0.095
Case Mix Index 0.90 0.85
Cost per Case (CMI = 1.0) $4,750 $4,900
2. Question : (TCO 4)Based on the information below, assume that the only change in the original example data is that Blue Cross raises their discount to 20 percent. What price should be set?
You have been asked to establish a pricing structure for radiology on a per-procedure basis. Present budgetary data is presented below:
Budgeted Procedures $10,000
Budgeted Cost $400,000
Desired Profit $80,000
It is estimated that Medicare patients comprise 40 percent of total radiology volume and will pay on average $38.00 per procedure. Approximately 10 percent of the patients are cost payers. The remaining charge payers are summarized below:
Payer Volume% Discount%
Blue Cross 20 4
Unity PPO 15 10
Kaiser 10 10
Self Pay 5 40
3. Question : (TCO 4) What is the amount of variance that can be attributed to the difference between budgeted and actual volume?
Use the following data to calculate the variances.
The following information has been prepared for a home health agency.
Wage Rate per Hour $16.00 $17.00
Fixed Hours 320 320
Variable Hours per Relative
Value Unit (RVU) 1.0 1.1
Relative Value Units (RVUs) 1,000 1,200
Total Labor Hours 1,320 1,640
Labor Costs $21,120 $27,880
Cost per RVU $21.12 $23.23
Budgeted costs at actual volume would be $25,344 ($21.12 × 1,200), and the total variance to be explained is $2,536 Unfavorable ($27,880 – $25,344). Be sure to specify whether the variance is favorable or unfavorable.
4. Question : (TCO 2) Explain the difference between the accrual basis of accounting and the cash basis of accounting.?
5. Question : (TCO 2) What is an audit (in the context of financial accounting)?
6. Question : (TCO 1) What are social responsibility and ethics as they relate to business-oriented organizations? How should social responsibility and ethics affect the decisions of even for-profit companies?
7. Question : (TCO 2) Define and describe the purpose of fund accounting (now called net assets).