Discussion Questions 100


  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


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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