It ONLY Makes Sense to Implement an ABC System When

question 45

Multiple Choice

It ONLY makes sense to implement an ABC system when:

• A)ABC provides information to make better decisions.
• B)its benefits exceed implementation costs.
• C)ABC traces more costs as direct costs.
• D)there is a strong cause-and-effect relationship between costs in the cost pools and their cost-allocation bases.

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Definitions:

IPA

An acronym that can refer to Independent Practice Associations, which are legal entities organized and owned by a network of independent physicians for the purpose of reducing overhead or contracting with health insurers.

HMO

A health maintenance organization; a type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO.

PPO

Preferred Provider Organization, a health insurance plan that offers a network of healthcare providers to choose from, typically at a lower cost.

Provider's Fee

The charge or cost set by a service provider, such as a doctor or a lawyer, for professional services rendered.