healthcare finance ch 5 & 6 quiz

what about a flexible budget is correct?

A flexible budget uses realized (actual) volume along with all other original (simple) budget assumptions.

Which of the following variances is a hospital manager most likely to be held accountable for? a. Labor variance b. Supplies variance c. Volume variance d. Answers (a) and (b) e. Answers (a), (b), and (c)

Labor variance Supplies variance

In budgeting, a variance is:

The difference between a realized value and a budgeted, or standard value

false

When a provider has market dominance and hence can set its own prices (within reason), it is called a price taker. True False

B

Which of the following statements best describes the contribution margin? a. The contribution margin is defined as fixed costs minus variable costs. b. The contribution margin is the dollar amount of each unit of output that is available first to cover fixed costs and then to contribute to profit. c. The contribution margin is defined as revenues minus fixed costs. d. The total contribution is the profit that an organization makes.

Which of the following pricing strategies is most likely to lead to long-term financial sustainability? a. Full cost b. Marginal cost c. Direct cost d. Indirect cost e. Variable cost

a

Which of the following statements about budgeting is not correct? a. In the conventional approach, the prior budget is used as the starting point. b. In zero-based budgeting, the prior budget is adopted for the coming year with no changes. c. All organizations use annual budgets, but most also use quarterly (or more frequent) budgets. d. Out-year budgets are used more for planning purposes than for control. e. Bottom-up budgets begin at the department level and then are approved by senior management.

b

Which of the following strategies is most likely to ensure profitability on a contract undertaken by a price-taker provider? a. Full-cost pricing b. Marginal-cost pricing c. Target costing d. Zero-cost pricing e. Direct-cost pricing

c

Which of the following is not part of a business's strategic plan? a. Mission statement b. Values statement c. Goals d. Capital budget e. Objectives

d

Budgets are used for: a. Planning b. Communication c. Control d. Answers (a) and (b) e. Answers (a), (b), and (c)

e

A variance analysis using a flexible budget highlights changes that result from "managerial" factors as opposed to changes that result from "volume forecast errors". True False

true

Small organizations may use a single operating budget in place of multiple budgets. True False

true

Under full-cost pricing, prices are set to cover all costs, including economic costs (profits). True False

true

Utilization management is more important for capitated patients than for fee-for-service patients. True False

true