Question 1

Which of the following is a direct cost?

Accepted Answer

Labor is a cost that can be directly attributed to a specific product or service, making it a direct cost. Rent and depreciation on equipment are examples of indirect costs, as they cannot be directly traced to a specific product or service. Health benefits could be either a direct or indirect cost depending on how they are allocated within the company.

Question 2

Three workers complete a full 8-hour day finishing concrete for a terrace.All three workers are paid $12 an hour and the job bills to the customer for $450.What are the total direct labor costs?

Accepted Answer

The total direct labor cost is the sum of the salaries paid to the workers for the hours worked. Each worker worked for 8 hours, and they were paid $12 an hour, so the total direct labor cost is:

3 workers x 8 hours x $12/hour = $288

Question 3

Which worker's wages would constitute a direct cost for a construction project?

Accepted Answer

The brick mason's wages would constitute a direct cost because they are directly involved in the construction project and their work is necessary for its completion. The other workers listed may be involved in the project but their wages may not be directly attributed to the project's construction activities.

Question 4

Which of these is typically a nonrecurring cost?

Accepted Answer

A site study is typically a one-time cost associated with a specific project, making it a nonrecurring cost. Labor, materials, and sales may be recurring costs depending on the nature of the business or project.

Question 5

The unofficial rule of thumb for ________ estimates is to aim for an accuracy of plus or minus 30%.

Accepted Answer

The answer of The unofficial rule of thumb for ________...

Question 6

Workers paid $15.00 per hour with an overhead charge of 1.45 and a personal time allowance of 1.15,have what total direct labor cost for an 8-hour work day?

Accepted Answer

Direct labor cost per hour = $15.00 + $1.45 + $1.15 = $17.60
Total direct labor cost for an 8-hour work day = 8 hours x $17.60/hour = $140.80
Therefore, the correct answer is C) $200.10 which includes the overhead charge and personal time allowance in addition to the direct labor cost.

Question 7

The charge that is most likely a fixed cost is for:

Accepted Answer

Equipment rental is typically a fixed cost, as the cost to rent the equipment remains the same regardless of how much it is used. Materials, direct labor, and utilities costs are all variable costs, as they vary based on the amount of production or services provided.

Question 8

Cost estimates can be too low if issues outside a firm's control affect the project organization's ability to complete the project.These ________ might include inflation or political instability.

Accepted Answer

The answer of Cost estimates can be too low if...

Question 9

________ cost estimates can only be given upon the completion of most of the design work at a point when the scope and capabilities of the project are well-understood.

Accepted Answer

The answer of ________ cost estimates can only be given...

Question 10

Activity-based costing is a budgeting method that identifies ________ associated with activities that consume resources.

Accepted Answer

The answer of Activity-based costing is a budgeting method that...

Question 11

Which of these is typically a recurring cost?

Accepted Answer

Logistics, such as shipping and transportation costs, are typically a recurring cost as they are necessary for ongoing operations and product distribution. Preliminary market analysis, personnel training, and outplacement services may be one-time expenses or occur infrequently.

Question 12

________ begins with the work packages of the work breakdown structure and specifies funds that are needed to support the tasks.These costs are aggregated by managers and duplicate costs are removed as managers' budgets are combined.

Accepted Answer

The answer of ________ begins with the work packages of...

Question 13

The notion that subsequent iterations of an activity require less time than the first attempt means that the activity is governed by ________.

Accepted Answer

The answer of The notion that subsequent iterations of an...

Question 14

A(n)________ is a standard unit of measure that represents the functional size of a software application.

Accepted Answer

The answer of A(n)________ is a standard unit of measure...

Question 15

A systems analyst is paid at the rate of $50/hour and will be needed for 40 hours.Her employer uses an overhead multiplier of 60% and does not factor in personal time.Her total direct labor cost should be billed at:

Accepted Answer

The direct labor cost for 40 hours of work at $50/hour is:
40 hours * $50/hour = $2000
The overhead multiplier is 60%, which means that the total cost including overhead is:
$2000 * 1.6 = $3200
Therefore, the total direct labor cost that should be billed is $3200.

Question 16

Which of these indirect costs is typically classified as a selling or administrative cost?

Accepted Answer

Secretarial support is typically classified as a selling or administrative cost as it is related to the day-to-day operations and management of a business. Utilities and insurance may be considered indirect costs, but they may be classified differently depending on their specific use and function within the business. Depreciation is a type of indirect cost but it is typically associated with the cost of goods sold (COGS) and not with selling or administrative costs.

Question 17

Consultations with a client cost $50 and copying a page costs $1.Once we know how many consultations and copies are needed,we can estimate the cost of the divorce project thanks to our ________ approach to budgeting.

Accepted Answer

The answer of Consultations with a client cost $50 and...

Question 18

________ is typically added to the project's budget following the identification of all project costs;that is,the project does not include ________ as part of the activity-based costing process.

Accepted Answer

The answer of ________ is typically added to the project's...

Question 19

Which of these indirect costs is typically classified as an overhead cost?

Accepted Answer

The answer of Which of these indirect costs is typically...

Question 20

The ________ is a plan that identifies the allocated resources,the project's goals,and the schedule that allows an organization to achieve those goals.

Accepted Answer

The answer of The ________ is a plan that identifies...

Quiz 8: Cost Estimation and Budgeting