chapter 14

Question 1

What is a budget?

A) A general estimate of future earnings
B) An informal record of expenses
C) A summary of past financial performance
D) A detailed financial plan for carrying out activities for a certain period

Answer 1

D) A detailed financial plan for carrying out activities for a certain period

Question 2

What must managers establish under a budget?

A) Explicit program goals and expectations
B) Personal financial goals
C) Employee work schedules
D) Patient satisfaction metrics

Answer 2

A) explicit program goals and expectations

Question 3

what is the budgeting process?
A) A one-time event to set financial goals
B) A review of past financial performance
C) An ongoing activity in which plans are made and revenues and expenditures are managed
D) A method of assessing employee performance

Answer 3

C) An ongoing activity in which plans are made and revenues and expenditures are managed

Question 4

What does a capital budget reflect?

A) Daily operational expenses
B) Expenses related to the purchase of major capital items
C) Fixed costs for staffing
D) Variable costs associated with patient care

Answer 4

B) Expenses related to the purchase of major capital item

Question 5

What do case mix groups (CMGs) represent?

A) A method for calculating hospital profits
B) A staffing model for nurses
C) A budgeting technique for hospitals
D) A patient classification system used to group the types of inpatients a hospital treats

Answer 5

D) A patient classification system used to group the types of inpatients a hospital treats

Question 6

What is a cost center?

A) A location where revenue is generated
B) A department responsible for marketing
C) An organization unit for which costs can be identified and managed
D) A team focused on patient outcomes

Answer 6

C) An organization unit for which costs can be identified and managed

Question 7

How are costs calculated?

A) Costs = price x utilization
B) Costs = price + utilization
C) Costs = price - utilization
D) Costs = utilization + overhead

Answer 7

A) Costs = price x utilization

Question 8

What are fixed costs?

A) Costs that fluctuate with patient volume
B) Costs related to patient care supplies
C) Costs associated with nonproductive hours
D) Costs that do not change as the volume of patients changes

Answer 8

D) Costs that do not change as the volume of patients changes

Question 9

What does Full-time equivalent (FTE) represent?

A) The number of patients a nurse can care for
B) A unit that equates to working full time, typically 37.5 hours per week
C) A calculation of hospital revenue
D) The total number of nurses employed

Answer 9

B) A unit that equates to working full time, typically 37.5 hours per week

Question 10

What are variable FTEs?

A) Positions that depend on the demand for care
B) Positions that do not change based on patient care demands
C) Positions that are fully funded regardless of workload
D) Positions that represent management staff

Answer 10

A) Positions that depend on the demand for care

Question 11

What are nonproductive hours?

A) Time worked on patient care
B) Paid time that is not worked
C) Overtime hours
D) Paid leave taken by employees

Answer 11

B) Paid time that is not worked

Question 12

What is an operating budget?

A) A plan for long-term capital expenditures
B) A forecast of patient satisfaction scores
C) The financial plan for the day-to-day activities of the organization
D) A budget for employee salaries

Answer 12

C) The financial plan for the day-to-day activities of the organization

Question 13

What is opportunity cost?

A) The cost of supplies used in patient care
B) The cost incurred when resources are used for one purpose instead of another
C) The cost of hiring additional staff
D) The fixed costs associated with running a department

Answer 13

B) The cost incurred when resources are used for one purpose instead of another

Question 14

What does the term “price” refer to in healthcare?

A) The cost of employee training
B) The revenue generated from services
C) The total budget for the organization
B) The revenue generated from services
D) The rate that health care providers set for the services they deliver

Answer 14

D) The rate that health care providers set for the services they deliver

Question 15

What are productive hours?

A) Paid time that is not worked
B) Paid time that is worked
C) Hours spent in training
D) Overtime hours

Answer 15

B) Paid time that is worked

Question 16

What is productivity?

A) The ratio of outputs to inputs
B) The amount of money spent on services
C) The total revenue generated by a department
D) The number of patients treated

Answer 16

A) The ratio of outputs to inputs

Question 17

What are outputs in healthcare?

A) The resources needed to provide services
B) Nursing services as measured by hours of care, number of home visits, etc.
C) The number of hours spent in meetings
D) The total patient admissions

Answer 17

B) Nursing services as measured by hours of care, number of home visits, etc.

Question 18

What is revenue?

A) Money received for providing goods or services
B) The total costs incurred by the organization
C) The budget allocated for salaries
D) The total hours worked by staff

Answer 18

A) Money received for providing goods or services

Question 19

What is a unit of service?

A) A measure of staff productivity
B) A measure of the work being procured by the organization
C) A calculation of hospital expenses
D) A patient satisfaction score

Answer 19

B) A measure of the work being procured by the organization

Question 20

What does variance refer to in budgeting?

A) The difference between projected budget and actual performance
B) The amount of money saved over a period
C) The total expenses incurred
D) The total revenue generated

Answer 20

A) The difference between projected budget and actual performance