Question 1

Which worker's wages would constitute a direct cost for a construction project?
A) The project's cost accountant
B) The brick mason
C) The architect's assistant
D) The foreman

Accepted Answer

The brick mason is directly involved in the construction work and their wages would be considered a direct cost. The project's cost accountant, architect's assistant, and foreman may be involved in the project, but their wages may not directly relate to the construction work.

Question 2

The gentleman farmer and surrealist aficionado commissioned a mural on barn that was an homage to Salvador Dalí's Persistence of Memory with a few farm animals included.The project would require the services of a senior muralist,a junior muralist,and a gofer.The senior muralist has an annual salary of $120,000,the junior muralist draws an annual salary of $75,000,and the gofer makes $30,000 per year.It is anticipated that the project will require 25 hours of senior muralist time,40 hours of junior muralist time,and 60 hours of gofer time.Overhead charges vary by position; the gofer has a lower overhead rate (30%)than the two muralist positions (50%).Use 2080 hours as an estimate for the number of hours in a year and a 15% factor for personal time.What is the total direct labor cost for the project?

Accepted Answer

The table displays the sequence of calculations; the total direct labor cost is $6,269.71 $$\begin{array} { | l | l | l | l | l | l | } 
\hline \text { Annual } & \text { Hourly } & \text { Hours } & & & \text { Direct } \
 \text { Salary } & \text { Rate } & \text { Needed } & \text { Overhead } & \text { Personal } & \text { Labor } \
\hline \$ 120,000.00 & \$ 57.69 & 25 & 1.5 & 1.15 & \$ 2,487.98 \
\hline \$ 75,000.00 & \$ 36.06 & 40 & 1.5 & 1.15 & \$ 2,487.98 \
\hline \$ 30,000.00 & \$ 14.42 & 60 & 1.3 & 1.15 & \$ 1,293.75 \
\hline & & & & \text { Total } & \$ 6,269.71 \
\hline
\end{array}$$

Question 3

You are probably looking at a bill for a variable cost when you are paying for:
A) Leased capital equipment.
B) Salaries.
C) Materials.
D) Health insurance.

Accepted Answer

Materials are a variable cost, as the amount used and purchased varies based on the level of production or sales. Leased capital equipment, salaries, and health insurance are often considered fixed costs as they do not typically fluctuate with changes in production or sales.

Question 4

The charge that is most likely a fixed cost is for:
A) Materials.
B) Equipment rental.
C) Direct labor.
D) Utilities.

Accepted Answer

Equipment rental is typically a fixed cost because it is a set amount that is paid regardless of the level of production or usage.

Question 5

A normal cost is incurred when:
A) Overtime is used more than originally planned.
B) Shipments are expedited.
C) Additional temporary workers are brought on site.
D) The aggressive baseline plan is adhered to.

Accepted Answer

A normal cost is related to the baseline plan or the original plan. In option D, it is mentioned that aggressive baseline plan is adhered to, which means that the project is progressing as per the original plan or baseline plan. Therefore, D is the correct choice, as it is in line with the concept of normal cost. Options A, B, and C are related to the extra expenses incurred due to unforeseen events or changes in the plan, which are not included in the normal cost.

Question 6

Which of the following is a direct cost?
A) Labor
B) Rent
C) Depreciation on equipment
D) Health benefits

Accepted Answer

Direct costs are those that can be directly attributed to a specific project or product. Labor is a direct cost as it is directly related to the production of a specific project or product. Rent, depreciation on equipment, and health benefits are all indirect costs as they cannot be solely attributed to a specific project or product.

Question 7

Which of these indirect costs is typically classified as an overhead cost?
A) Advertising
B) Shipping
C) Sales commissions
D) Taxes

Accepted Answer

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

Question 8

Direct costs are those clearly assigned to the aspect of the project that generated the cost.

Accepted Answer

Direct costs are those that can be easily and accurately attributed to a specific aspect or activity of a project, such as labor or materials. Indirect costs, on the other hand, are not easily assigned to a specific aspect of the project and may include expenses such as rent or utilities.

Question 9

Which of these is typically a nonrecurring cost?
A) Site study
B) Labor
C) Material
D) Sales

Accepted Answer

A site study is typically a one-time cost and is not an ongoing expense. Labor and materials are recurring costs that are required for the ongoing production or maintenance of a project or product. Sales may fluctuate over time, but they are not considered a one-time cost.

Question 10

The term expedited cost has the same meaning as crashing cost in the project management milieu.

Accepted Answer

Both terms refer to the additional cost incurred in a project in order to speed up the completion time.

Question 11

Material is an example of a cost that is recurring,variable and direct.

Accepted Answer

Material cost is a cost that is incurred repeatedly for each unit of production, it varies with the level of production and can be directly traced to the product being produced. Therefore, it is a recurring, variable and direct cost.

Question 12

Which of these is typically a recurring cost?
A) Preliminary market analysis
B) Personnel training
C) Outplacement services
D) Logistics

Accepted Answer

The answer of Which of these is typically a recurring...

Question 13

Unplanned costs incurred when steps are taken to speed up a project's completion are called:
A) Expedited costs.
B) Accelerated costs.
C) Pass-through costs.
D) Normal costs.

Accepted Answer

The answer of Unplanned costs incurred when steps are taken...

Question 14

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?
A) $151.30
B) $174.00
C) $200.10
D) $236.80

Accepted Answer

The direct labor cost per hour is calculated as follows:

Hourly wage + Overhead charge + Personal time allowance
$15.00 + ($15.00 x 1.45) + ($15.00 x 1.15)
= $15.00 + $21.75 + $17.25
= $54.00 per hour

For an 8-hour work day, the total direct labor cost would be:

Total direct labor cost = Direct labor cost per hour x Number of hours worked
= $54.00 x 8
= $432.00

Therefore, the best choice is C) $200.10.

Question 15

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?
A) $450
B) $12
C) $288
D) $96

Accepted Answer

Each worker worked 8 hours, so they worked a total of 24 hours. 
Direct labor costs = Number of hours worked x Hourly rate 
Direct labor costs = 24 hours x $12/hour 
Direct labor costs = $288 
Therefore, the answer is C.

Question 16

Provide examples and discuss the differences between direct and indirect costs.

Accepted Answer

The answer of Provide examples and discuss the differences between...

Question 17

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:
A) $2,000.
B) $3,200.
C) $1,250.
D) $4,500.

Accepted Answer

Direct labor cost = rate x hours
Direct labor cost = $50/hour x 40 hours = $2,000
Overhead cost = Direct labor cost x overhead multiplier
Overhead cost = $2,000 x 0.6 = $1,200
Total cost = Direct labor cost + Overhead cost
Total cost = $2,000 + $1,200 = $3,200
Therefore, the correct answer is B) $3,200.

Question 18

An expedited cost is one that does not vary with respect to their usage.

Accepted Answer

An expedited cost is a cost that is incurred when a product or service requires faster delivery or completion than the normal or standard timeframe. The cost of expedited services varies depending on the level of urgency or speed required. Therefore, expedited costs do vary with respect to their usage.

Question 19

Which of these indirect costs is typically classified as a selling or administrative cost?
A) Secretarial support
B) Utilities
C) Insurance
D) Depreciation

Accepted Answer

Secretarial support is typically classified as a selling or administrative cost as it directly supports the administrative and clerical functions of the organization, which are necessary for its operations and sales. Utilities and insurance may be classified as overhead costs, while depreciation is a direct cost associated with the use and deterioration of the organization's assets.

Question 20

What are four major categories of costs? Provide descriptions for each category.

Accepted Answer

The answer of What are four major categories of costs?...

Quiz 8: Cost Estimation and Budgeting

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

You are probably looking at a bill for a variable cost when you are paying for:

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

A normal cost is incurred when:

Which of the following is a direct cost?

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

Direct costs are those clearly assigned to the aspect of the project that generated the cost.

Which of these is typically a nonrecurring cost?

The term expedited cost has the same meaning as crashing cost in the project management milieu.

Material is an example of a cost that is recurring,variable and direct.

Which of these is typically a recurring cost?

Unplanned costs incurred when steps are taken to speed up a project's completion are called:

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?

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?

Provide examples and discuss the differences between direct and indirect costs.

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:

An expedited cost is one that does not vary with respect to their usage.

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

What are four major categories of costs? Provide descriptions for each category.