4. Utilization management is more important for capitated patients than for fee-for-service patients. a. True b. False 5. Which of the follow 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 margin is defined as the contribution margin multiplied by total revenues. e. The total contribution margin is defined as the contribution margin multiplied by total costs. 6. Which of the following statements regarding the relationship between reimbursement method and risk is most correct? a. Under capitation, risk is reduced by maximizing fixed costs. b. Under capitation, risk is reduced by maximizing variable costs c. Under fee-for-service, risk is reduced by maximizing fixed costs. d. Under fee-for-service, risk is reduced by maximizing variable costs. e. Both a. and d. above are correct. 7. 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 8. The operating plan focuses on how a business plans to meet the goals and objectives contained in the strategic plan. a. True b. False 9. To be most effective, budgets must be thought of as financial staff tools. a. True b. False 10. Which of the following statements about budgeting is incorrect? 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 department level and then are approved by senior management. 11. Small organizations may use a single operating budget in place of multiple budgets. a. True b. False. 12. In budgeting, variance is: a. A measure of the degree of dispersion of a distribution about its mean value. b. The difference between a realized value and a budgeted, or standard, value. c. The percentage decrease in volume that can occur without causing the organization to lose money. d. The difference between operating profit and total profit. e. The difference between total revenues and total costs. 13. A variance analysis using a flexible budget highlights changes that result from "managerial" factors as opposed to changes that result from volume forecast errors. a. True b. False 14. Which of the following statements best describes the revenue cycle? a. It focuses on cash management. b. It focuses on inventory management c. It focuses on receivables management. d. It focuses on cash, inventory, and receivables management. e. It focuses on all activities associated with billing and collecting for services. 15. Two important keys to successful revenue cycle management are information technology and electronic claims processing. a. True b. False 16. Which of the following techniques are used to monitor a business's receivables? a. Average collection period b. Aging schedule c. Collections budget d. Both a. and b. above e. a., b., and c. above 17. Float is the difference between the balance shown on the bank's books and the balance on the business's own checkbook. a. True b. False 18. A business's float is maximized by accelerating disbursements and slowing receipts. a. True b. False