Question 1.1.(TCO 3) When considering
how changes in volume affect total fixed costs, it is important to
consider: (Points : 5)
the relevant range
the variable cost per unit
price
both A and B
both B and C
Question 2.2.(TCO 3) To maximize the
amount of profit realized from a rate increase, charges should be
increased most in departments with: (Points
: 5)
High charge payer mix/high
write-offs for bad debt, charity, & discounts
Low charge payer mix/low
write-offs for bad debt, charity, & discounts
High charge payer mix/low
write-offs for bad debt, charity, & discounts
Low charge payer mix/high
write-offs for bad debt, charity, & discounts
Question 3.3.(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? (Points
: 5)
High fixed costs of treatment
Low Medicare payment
High prices
Low prices
Question 4.4.(TCO 3)
Your hospital has been
approached by a major HMO to perform all their DRG 225 cases (foot
surgeries). They have offered a flat payment of $8,000 per case. You have
reviewed your charges for DRG 225 during the last year and found the
following profile:
Average Charge: $11,300
Average LOS: 4.5 Days
Cost/Charge
Variable Cost %
Routine
Charge
$3,200
0.75
65
Operating
Room
1,850
0.7
80
Anesthesiology
210
0.7
75
Lab
575
0.65
40
Radiology
275
0.65
50
Medical
Supplies
3,220
0.6
85
Pharmacy
955
0.55
85
Other
Ancillary
1,015
0.75
55
Total
Ancillary
$8,100
0.7
75
In the above data set,
assume that the hospital’s cost-to-charge ratio is 0.75 for routine
services and 0.70 for Total Ancillary services. Using this information,
what would the average cost of DRG 225 be? (Your answer might be slightly
different due to rounding. Pick the closest.)
(Points : 5)
$7,613
$8,100
$7,613
$8,000
$8,070
Question 5.5.(TCO 3) David Jones, the new administrator for
a surgical clinic, was trying to determine how to allocate his indirect
expenses. His staff was complaining that the current method of taking a
percentage of revenues was unfair. He decided to try to allocate utilities
based on square footage of each department, administration based on direct
costs, and laboratory based on tests. Use the information in the chart
below to answer the question.
Square Footage
Direct Expenses
Lab Tests
Utilities
200,000
Administration
2,000
500,000
Laboratory
2,000
625,000
Day-op Suite
3,000
1,400,000
4,000
Cystoscopy
1,500
350,000
500
Endoscopy
1,500
300,000
500
Total
10,000
3,375,000
5,000
Based on the scenario above, what are the Day Op Suite's total expenses? (Points : 10)
Question 6.6.(TCO 3) Your hospital has been approached by a
major HMO to perform all their MS-DRG 470 cases (major joint procedures).
They have offered a flat price of $10,000 per case. You have reviewed your
charges for MS-DRG 470 during the last year and found the following
profile:
Average Charge
$15,000
Average LOS
5 Days
Routine Charge
$3,600
Cost/Charge
0.80
Variable
Cost % 60
Operating Room
2,657
0.80
80
Anesthesiology
293
0.80
80
Lab
1,035
0.70
30
Radiology
345
0.75
50
Medical Supplies
4,524
0.50
90
Pharmacy
1,230
0.50
90
Other Ancillary
1,316
0.80
60
Total Ancillary
$11,400
0.75
50
The HMO in the above example has indicated that their doctors use less
expensive joint implants. If this less expensive implant were used, your
medical supply charges would be reduced by $2,000. What is the estimated
reduction in variable cost? (Points
: 10)
Question 7.7.(TCO 3) How are costs classified? (Points : 10)
Solution: HSM340 quiz 3