1. The Waterford Clinic pays a flat monthly fee of $250 under a two-year contract for certain computer services. This monthly fee of $250 is a:
A. Variable cost B. Semivariable cost C. Fixed cost D. None of the above
2. The Horizon Hospice provides a gift basket to every new patient that is admitted to the hospice. The baskets cost $15.00 apiece. These gift basket costs represent a:
A. Variable cost B. Semivariable cost C. Fixed cost D. None of the above
3. The MidTown Nursing Facility has fixed costs amounting to $200,000. At an occupancy rate of 100 patients, the fixed cost per patient amounts to $2,000. In another way to think about fixed costs, if the administrator can increase the occupancy rate to 125 patients, will the fixed cost per patient then:
A. Increase B. Decrease C. Neither of the above
4. Fully depreciated fixed assets (meaning all depreciable cost has been recognized) may still remain on the books if they are still in use.
A. Correct B. Not correct C. Not applicable
5. Assume a fixed asset cost of $10,000 and a useful life of five years. In commencing to compute double-declining depreciation, the double-declining factor is computed as follows: first the $10,000 cost of the fixed asset is divided by the asset’s useful life of five years to equal 20%, or a factor of .20. Required: Next multiply the factor of .20 by what amount to arrive at the proper double-declining factor?
A. Multiply by ten percent B. Multiply by one-and-one-half C. Multiply by two D. None of the above