AHIP AHM-520 Exam - Topic 6 Question 105 Discussion

Actual exam question for AHIP's AHM-520 exam

Question #: 105
Topic #: 6

For a given healthcare product, the Magnolia Health Plan has a premium of $80 PMPM and a unit variable cost of $30 PMPM. Fixed costs for this product are $30,000 per month. Magnolia can correctly calculate the break-even point for this product to be:

A274 members

B375 members

C600 members

D1,000 members

Show Suggested Answer

Suggested Answer: C

by Hayley at Jan 11, 2025, 07:39 PM

Limited Time Offer

25%

Off

Get Premium AHM-520 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Carlee

4 months ago

Not sure about that calculation, feels a bit sketchy.

upvoted 0 times

...

Ashleigh

4 months ago

I agree, 375 sounds right based on the numbers.

upvoted 0 times

...

Miss

4 months ago

Wait, how did they get 274 members? That seems off.

upvoted 0 times

...

Rima

4 months ago

I think it's definitely 375 members!

upvoted 0 times

...

Beatriz

5 months ago

Break-even is calculated by fixed costs divided by (premium - variable cost).

upvoted 0 times

...

Kenia

5 months ago

I believe the answer is 375 members, but I’m not completely confident. I just hope I remember the calculations correctly from our last review session.

upvoted 0 times

...

Thurman

5 months ago

I’m a bit confused about the numbers. If I recall correctly, the fixed costs are $30,000, but I’m not sure how to apply that to find the break-even point.

upvoted 0 times

...

Pedro

5 months ago

I remember a practice question that was similar, and I think we had to subtract the variable cost from the premium first. That might help us find the right answer here.

upvoted 0 times

...

Celia

5 months ago

I think the break-even point is calculated by dividing fixed costs by the difference between premium and variable cost, but I’m not entirely sure about the formula.

upvoted 0 times

...

Amira

5 months ago

Alright, this is a classic break-even problem. I've got the premium, variable cost, and fixed costs, so I just need to plug those into the formula and solve for the break-even point. Should be a straightforward calculation.

upvoted 0 times

...

Tasia

5 months ago

I'm a little unsure about this one. Break-even analysis can be tricky, and I want to make sure I'm doing the calculations correctly. Let me walk through it step-by-step to make sure I don't miss anything.

upvoted 0 times

...

Quentin

5 months ago

Hmm, let me think this through. The premium is $80 PMPM and the variable cost is $30 PMPM, so the contribution margin is $50 PMPM. Then I need to divide the fixed costs of $30,000 by the contribution margin to get the break-even point. Okay, I think I've got this!

upvoted 0 times

...

Madonna

6 months ago

This looks like a straightforward break-even analysis problem. I'll start by calculating the contribution margin per member, then divide the fixed costs by that to get the break-even point.

upvoted 0 times

...

Annamae

1 year ago

Haha, I bet the exam writers are trying to catch us with some tricky math here. Good thing we're all sharp-minded healthcare professionals, am I right?

upvoted 0 times

Kendra

12 months ago

D) 1,000 members

upvoted 0 times

...

Graciela

1 year ago

C) 600 members

upvoted 0 times

...

Rosenda

1 year ago

B) 375 members

upvoted 0 times

...

Ria

1 year ago

A) 274 members

upvoted 0 times

...

Emily

1 year ago

Ah, I see what you mean, Carma. The break-even point is where total revenue equals total costs, so we need to set (PMPM revenue * members) = (PMPM variable cost * members) + fixed costs. Solving for members gives us the answer C. 600 members.

upvoted 0 times

...

Carma

1 year ago

Hmm, I'm not so sure. Shouldn't we be looking at the total revenue and total costs to find the break-even point? Let me double-check the calculations.

upvoted 0 times

...

Norah

1 year ago

I think the answer is B. 375 members. The fixed costs are $30,000 and the contribution margin per member is $50 ($80 PMPM - $30 PMPM), so the break-even point would be $30,000 / $50 = 375 members.

upvoted 0 times