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10/6/22, 11:42 AM Quiz: Quiz 4 https://webcourses.ucf.edu/courses/1415849/quizzes/2323792/take 1/9 Quiz 4 Started: Oct 6 at 11:01am Quiz Instructions This Quiz covers materials from Gapenski Ch 5. Highest score out of the two attempts will be kept. 0.1 pts Question 1 The relationship between costs and the volume of services provided is called underlying cost structure. In this context, there are three types of costs: Fixed cost , which are independent of volume (if volume remains in relevant range) variable cost , which depend on volume 0.1 pts Question 2 Breakeven volume is defined as that volume needed for an organization (or service or program) to be financially self-sufficient. 0.1 pts Question 3 Consider the following data:
10/6/22, 11:42 AM Quiz: Quiz 4 https://webcourses.ucf.edu/courses/1415849/quizzes/2323792/take 2/9 $1,200 $1,600 $800 $2,000 $400 Fixed costs = $10,000,000. Variable cost per inpatient day = $400. Revenue per inpatient day = $1,200. What is the contribution margin? 0.1 pts Question 4 $2,750,000 $1,750,000 $3,750,000 $0 −$3,750,000 Consider the following cost and revenue data for Shasta Memorial Hospital: Fixed costs = $15,000,000. Variable cost per inpatient day = $250. Revenue per inpatient day = $1,000. What is the expected profit at a volume of 25,000 inpatient days? 0.1 pts Question 5
10/6/22, 11:42 AM Quiz: Quiz 4 https://webcourses.ucf.edu/courses/1415849/quizzes/2323792/take 3/9 $700,000 $400,000 $800,000 $500,000 $600,000 Assume that Randall Clinic has fixed costs of $500,000 and a variable cost (per visit) rate of $20. What is the total cost forecast for a volume of 5,000 patient visits? 0.1 pts Question 6 3,334 5,000 3,200 4,000 None of these answers is correct. Seattle Radiology Group plans to invest in a new CT scanner. The group estimates $1,500 net revenue per scan. Preliminary market assessments indicate that demand will be less than 5,000 scans per year. The group has the choice between two different types of scanner that can fill its imaging needs. Each scanner has a capacity of 5,000 scans per year but involves a different mix of labor and capital. Scanner A would result in total fixed costs of $1,000,000 per year and would yield a profit of $500,000 if the volume is 5,000 scans. Scanner B would result in total fixed costs of $800,000 per year and would yield a profit of $450,000 if the volume is 5,000 scans. At what number of scans are the scanners equally profitable? 0.1 pts Question 7
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10/6/22, 11:42 AM Quiz: Quiz 4 https://webcourses.ucf.edu/courses/1415849/quizzes/2323792/take 4/9 $12,500,000 $17,500,000 $20,000,000 $15,000,000 $25,000,000 Assume that Lexington Hospital has fixed costs of $10,000,000 and a variable cost (per inpatient day) rate of $200. What is the total cost forecast for a volume of 50,000 patient days? 0.1 pts Question 8 Statements a. and d. are both correct. Under capitation, risk is reduced by maximizing variable costs. Under fee-for-service, risk is reduced by maximizing variable costs. Under capitation, risk is reduced by maximizing fixed costs. Under fee-for-service, risk is reduced by maximizing fixed costs. Which of the following statements regarding the relationship between reimbursement method and risk is most correct ? 0.1 pts Question 9 Assume the local children’s hospital implements an outpatient asthma intervention to improve the health outcomes of children with asthma. As a result, the hospital sees a dramatic reduction in the number of inpatient admissions for children with asthma, but very little change in the total cost of operating the hospital. Which of the following statements describes the most likely reason for the lack of cost savings?
10/6/22, 11:42 AM Quiz: Quiz 4 https://webcourses.ucf.edu/courses/1415849/quizzes/2323792/take 5/9 The hospital has a very high variable cost per admission. The hospital’s cost structure primarily consists of variable costs. The hospital reduced its capacity (i.e., downsized) following the drop in admissions. The hospital’s cost structure consists of an equal mix of variable and fixed costs. The hospital’s cost structure primarily consists of fixed costs. 0.1 pts Question 10 True False True or False: Through changes to contracts or other operational decisions, it may be possible to convert fixed costs to variable costs or vice versa. 0.1 pts Question 11 25,000 22,500 15,000 17,500 Consider the following cost and revenue data for Great Lakes Hospital: Fixed costs = $15,000,000. Variable cost per inpatient day = $250. Revenue per inpatient day = $1,000. What is the breakeven volume (in patient days)?
10/6/22, 11:42 AM Quiz: Quiz 4 https://webcourses.ucf.edu/courses/1415849/quizzes/2323792/take 6/9 20,000 0.1 pts Question 12 Managerial accounting information is prepared in accordance with rules established by outsiders (generally accepted accounting principles [GAAP]). Managerial accounting information is used both at the organizational level and at the subunit (department and lower) level. Budgets are an important managerial accounting tool. Managerial accounting information is primarily forward looking, as opposed to focusing on historical information. Managerial accounting information is used primarily by managers within the organization. Which of the following statements about managerial accounting is incorrect ? 0.1 pts Question 13 Higher volume leads to a higher variable cost per unit. None of these statements is correct. Higher volume leads to higher total costs. Higher volume leads to a higher contribution margin per unit. Higher volume leads to higher average costs. Consider the following data: Fixed costs = $10,000,000. Variable cost per unit = $400. Revenue per unit = $1,200. Within the relevant range, which of the following statements is most correct ?
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10/6/22, 11:42 AM Quiz: Quiz 4 https://webcourses.ucf.edu/courses/1415849/quizzes/2323792/take 7/9 0.1 pts Question 14 The total contribution margin is defined as the contribution margin multiplied by total costs. The contribution margin is defined as revenues minus fixed costs. The contribution margin is the dollar amount of each unit of revenue remaining after variable costs that is available first to cover fixed costs and then to contribute to profit. The contribution margin is defined as fixed costs minus variable costs. The total contribution margin is defined as the contribution margin multiplied by total revenues. Which of the follow statements best describes the contribution margin? 0.1 pts Question 15 $5 $10 $15 $25 $20 Assume that Goodhealth Clinic has fixed costs of $1,000,000 and a total cost forecast of $1,500,000 at a volume of 20,000 patient visits. What is the clinic’s variable cost rate? 0.1 pts Question 16
10/6/22, 11:42 AM Quiz: Quiz 4 https://webcourses.ucf.edu/courses/1415849/quizzes/2323792/take 8/9 834 160 5,000 250 3,200 Seattle Radiology Group plans to invest in a new CT scanner. The group estimates $1,500 net revenue per scan. Preliminary market assessments indicate that demand will be less than 5,000 scans per year. The group is considering a scanner (Scanner B) that would result in total fixed costs of $800,000 and would yield a profit of $450,000 per year at a volume of 5,000 scans. What is the estimated breakeven volume (in number of scans) for Scanner B? 0.1 pts Question 17 A decrease in the selling price per pill An increase in the unit (per pill) contribution margin An increase in total fixed costs An increase in the variable cost per pill An increase in allocated overhead (indirect) costs Smith Pharmaceuticals is trying to estimate the breakeven volume of sales on a newly developed drug. Which of the following would be expected to reduce the number of pills Smith would need to sell to breakeven (i.e., which would result in a lower breakeven volume) assuming everything else remains the same? 0.1 pts Question 18
10/6/22, 11:42 AM Quiz: Quiz 4 https://webcourses.ucf.edu/courses/1415849/quizzes/2323792/take 9/9 Quiz saved at 11:42am True False True or False: Managerial accounting data typically require assumptions about the future and are therefore more uncertain than financial accounting data. 0.1 pts Question 19 True False True or False: An organization with high fixed costs (relative to variable costs) will suffer a greater decrease in profit as volume declines than an organization with high variable costs (relative to fixed costs). 0.1 pts Question 20 True False True or False: In economics, the situation in which average cost (per unit of output) declines as volume increases is known as economies of scale. Submit Quiz
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