Question 1

Every morning I stumble into the office,turn on the lights and brew a pot of coffee.Sometimes that's all I do and other days I accomplish a great deal.The coffee and light expenses should be classified as ________ costs.

Accepted Answer

fixed

Question 2

Function point analysis is a system for estimating the size of software projects based on the number of lines of code a typical programmer can write in a day.

Accepted Answer

Function point analysis is not based on lines of code, but rather on the functionality or features provided by the software. It takes into account inputs, outputs, user interactions, data storage, and other aspects of the system to estimate its size and complexity.

Question 3

A time-phased budget allocates costs across both project activities and the anticipated time in which the budget is to be expended.

Accepted Answer

A time-phased budget is designed to allocate costs to specific project activities and also across the expected time frame in which the budget is planned to be used. This helps project managers to keep track of costs, set goals and measure progress against the project plan.

Question 4

Overhead and selling and administration are classified as ________ costs.

Accepted Answer

The answer of Overhead and selling and administration are classified...

Question 5

Activity-based costing is based on the notion that projects consume activities and activities consume resources.

Accepted Answer

Activity-based costing (ABC) is a costing method that identifies activities and the resources used to perform them to assign costs to products or services. This is based on the idea that projects or products consume activities, and activities consume resources. ABC helps to ensure that overhead costs are allocated more accurately to products or services, providing a better understanding of product profitability and cost management.

Question 6

A common reason for cost overruns in a project is a low initial estimate of project cost.

Accepted Answer

When a project is initially estimated to cost less than it actually does, there is a risk of running into cost overruns if unexpected expenses arise during the course of the project. This can be due to a range of factors such as underestimating the complexity of the project, failing to anticipate additional costs or changes in scope, or not factoring in inflation and other economic variables.

Question 7

A budget contingency of $1 million on a $10 million project means that the project will be planned for a cost of $10 million,but the project organization receives an extra $1 million to guard against unforeseen cost overruns.

Accepted Answer

The answer of A budget contingency of $1 million on...

Question 8

There is a tendency for different departments or functions to compete for scarce resources in a zero-sum game when bottom-up budgeting is used to develop a project budget.

Accepted Answer

The answer of There is a tendency for different departments...

Question 9

Top-down budgeting,where input is gathered directly from the organization's top management,is often quite accurate.

Accepted Answer

Top-down budgeting involves gathering input directly from top management who have a clear understanding of the organization's goals and financial situation. This can lead to more accurate budget estimates as top management has a broader view of the organization's financial situation and resource allocation needs.

Question 10

A learning rate of 90% means that for every doubling of output,the time required by the activity falls by 10%.

Accepted Answer

A learning rate of 90% means that the time required by the activity falls by 10% for every doubling of output.

Question 11

An order of magnitude estimate is usually more accurate than a ballpark estimate.

Accepted Answer

An order of magnitude estimate and a ballpark estimate are both rough estimates, but neither is consistently more accurate than the other; the terms are often used interchangeably to describe an approximation.

Question 12

Normal conditions,by definition,occur the vast majority of the time in project management.

Accepted Answer

Normal conditions, by definition, refer to standard or expected conditions, but in project management, it's common to encounter unexpected issues or changes, making "normal" conditions less frequent than one might assume.

Question 13

Employing an overhead multiplier is sometimes referred to as the ________ rate for direct labor costs.

Accepted Answer

The answer of Employing an overhead multiplier is sometimes referred...

Question 14

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

Accepted Answer

Expedited cost and crashing cost are interchangeable terms used in project management to refer to the additional cost incurred to shorten the duration of a project.

Question 15

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

Accepted Answer

Direct costs are expenses that can be specifically attributed to a particular project or activity, such as salaries, materials, and equipment. These costs are easily identifiable and clearly assigned to the project that generated them.

Question 16

Comparative estimates are more accurate than definitive estimates when applied to the same project.

Accepted Answer

Comparative estimates are based on examining similar projects or tasks and making an estimate based on that comparison, which can lead to a more accurate estimate for the current project. Definitive estimates, on the other hand, rely on detailed analysis and precise data, but may not account for unique circumstances or variability that can impact the project.

Question 17

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

Accepted Answer

Material cost is an example of a recurring cost as it is incurred repeatedly during the production process. It is also a variable cost as the amount spent on material increases or decreases with the level of production. Finally, it is a direct cost as it can be easily traced to the specific product being produced.

Question 18

Unplanned costs incurred when steps are taken to speed up the project's completion are ________.

Accepted Answer

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

Question 19

________ costs might be those associated with charges applied once at the beginning or end of a project.

Accepted Answer

The answer of ________ costs might be those associated with...

Question 20

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

Accepted Answer

Expedited costs are costs that are incurred to accelerate or speed up a process or task. These costs can vary based on the extent of the acceleration or the urgency of the task. Therefore, expedited costs are not fixed costs and can vary with usage.

Quiz 8: Cost Estimation and Budgeting