Devry HSM340 Midterm exam Spring 2014

Midterm Exam page 1

Question 1.1. (TCO 4) Budgets normally cover a period of:
(Points : 5)

5 years

2 years

3 years

1 year

Question 2.2. (TCO 4) Which budgetary issue causes the most
strife in all areas of a health care organization? (Points : 5)

Setting volume
levels

Setting prices

Allocation of
indirect costs

Deciding
whether to use a fixed or flexible budget

Question 3.3. (TCO 4) Efficiency is a relationship between:
(Points : 5)

Outputs and
organizational goals

Inputs and
outputs

Inputs and
organizational goals

None of the
above

Question 4.4. (TCO 3) Which of the following is the first
step in any budgetary process? (Points : 5)

Define standard
treatment protocols

Define required
departmental volumes

Define standard
cost profiles

Define volumes
of patients

Question 5.5. (TCO 3) Assume that the clinic used the price
that they need to exactly break even at 10,000 shots. Fewer people than
expected showed up and purchased the flu shot. The clinic would: (Points : 5)

earn a profit.

have a loss.

break-even.

have a reduced
unit contribution margin.

none of the
above.

Question 6.6. (TCO 2) A statement that reports inflows and
outflows of cash during the accounting period in the categories of operations,
investing, and financing, is called a(an): (Points : 5)

Income
statement

Statement of
retained earnings

Balance sheet

Statement of
cash flows

Report of
management

Question 7.7. (TCO 2) _____ is the most important financial
metric to review to determine long-term financial viability. (Points : 5)

Return on
equity

Total margin

Days cash on
hand

Hospital cost
index

None of the
above

Midterm Exam page 2

Question 1. 1. (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.

BudgetActual

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.
(Points : 5)

Question 2. 2. (TCO 2) Explain the difference between the
accrual basis of accounting and the cash basis of accounting.? (Points : 10)

Question 3. 3. (TCO 2) What is an accounting entity? (Points
: 10)

Question 4. 4. (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?
(Points : 20)

Question 5. 5. (TCO 2) Define and describe the purpose of
fund accounting (now called net assets). (Points : 20)

Explanation & Answer

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