Discussion Questions 100

DQ1

  1. Define direct costs.
  2. Define Indirect costs
  3. Why are direct and indirect costs important to management?
  4. Would you describe your current job today as a direct cost or a indirect cost? Why?
  5. Categorize the following as direct or indirect:

a. Managed care marketing expense

b. Real estate taxes

c. Liability insurance

d. Clinic telephone expense

e. Utilities (for the entire facility)

f. Emergency room medical supplies

DQ2

What is break-even analysis and why is it an important element in the discussion of operating leverage? In your response include a discussion on the break-even point.

Compare fixed and variable costs and explain the significance of the difference in making financial decisions. What does contribution margin (CM) mean?

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