A Hospital Adds a New Addition and Needs to Acquire

question 92

Multiple Choice

A hospital adds a new addition and needs to acquire some new equipment for the addition.The cost driver for the equipment is patient-days per month.The new addition increases the patient-days per month outside the relevant range.What type of equipment costs will change as a result of the addition?

• A) discretionary fixed costs
• B) discretionary variable costs
• C) committed fixed costs
• D) committed variable costs

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Definitions:

Services

Services are intangible actions or activities that one party provides to another, which do not result in the ownership of anything but can fulfill a need or provide satisfaction.

Par Common Stock

The nominal or face value assigned to common stock shares in the corporate charter, significant for legal and accounting purposes.

Par Preferred Stock

Preferred shares of a company that have a declared face value and potentially have priority over common stock in dividend distribution.

Shares

Shares represent an ownership stake in a company or financial asset, entitling the holder to a proportional share of profits, distributed as dividends, if announced.