Fee-For-Service Caused a Situation Where Physicians Could Control the Number

question 76

Multiple Choice

Fee-for-service caused a situation where physicians could control the number of (often unnecessary) visits required for treatment.This problem was called:

• A) self-regulation.
• B) billable rates.
• C) supplier-induced demand.
• D) prescription authority.

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Definitions:

Variable Costing

An accounting method that only includes variable costs in the cost of goods sold and analyzes fixed costs separately.

Contribution Margin

The amount remaining from sales revenue after variable costs have been deducted, indicating how much contributes to covering fixed costs and generating profit.

Manufacturing Margin

The difference between the sales revenue generated from manufactured goods and the cost of goods sold (COGS), highlighting the profitability of manufacturing activities.

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs and treats fixed manufacturing overhead as a period cost.