PMP Exam Self Test Questions on Cost Control
Answers
þ C. Analogous estimating is less accurate than other estimating methods. ý A is incorrect, as regression analysis is a type of parametric modeling. B is incorrect, as bottom-up estimating starts with zero and adds up the project costs. D is incorrect, as analogous estimating is not more accurate. | |
þ B. The WBS is the input that can help you the most with the cost estimates. ý A is incorrect, as parametric modeling is a form of estimating, not an input. C is incorrect, as the project scope is not an input to the estimating process. D is incorrect, as the requirements document is also not an input to the estimating process. | |
þ A is correct; $750 per ton is an example of parametric modeling. ý B is incorrect, as historical information is analogous, not parametric. C and D are incorrect, as these do not describe parametric modeling. | |
þ C. Bottom-up estimating provides the most accurate estimates. The project manager starts at zero, the bottom, and accounts for each cost within the project. ý A, B, and D are all incorrect as they do not reflect the most accurate method to create an estimate. | |
þ D is the best choice. As the project team completes more and more units, the time to complete a hotel room should take less and less time. ý Choices A, B, and C are incorrect as they do not answer the question as fully as answer D. | |
þ C. Value analysis is a systematic approach to find less costly ways to complete the same work. ý A and B are not correct, as this situation does not describe a specific time or cost constraint. D is incorrect, as the learning curve happens as the project team completes the work. Value analysis is a study of a process to complete the work faster and more affordably. | |
þ A. The after-project costs are known as the life cycle costs. ý Choices B and C are incorrect, though tempting, because they do not describe the process of calculating the ongoing expenses of the product the project is creating. D is incorrect; operations do not fully describe the expenses unique to the product. | |
þ A. The rough order of magnitude is the least accurate approach, as it may vary from –25 percent to +75 percent. ý Choices B and C are more accurate estimates than the rough order of magnitude. Choice D is not a valid answer for this question. | |
þ B. The cost management plan controls how cost variances will be managed. ý Choices A, C, and D are incorrect descriptions of the cost management plan. | |
þ B. This is an example of the 0/100 rule. This completion method allows for zero percent credit on an activity until it is 100 percent complete. ý Choice A allows for 50 percent completion when the work begins and 50 percent when the work is completed. Choices C and D are incorrect responses, as they do not describe the scenario. | |
þ D. Using bottom-up estimating is not less expensive to do. ý A, B, and C are not correct choices, as these are attributes of a bottom-up estimating process. | |
þ B. The present value of $100,000 four years from now can be calculated through this formula: Present Value = FV/(1+R)n. FV is the future value, R is the interest rate, and n is the number of time periods. ý Choices A, C, and D are all incorrect answers, as they do not reflect the present value. | |
þ A. Cost estimates and the project schedule are inputs to the cost budgeting process. ý Choices B, C, and D are all incorrect as they are not inputs to cost budgeting. | |
þ C. Sunk costs are monies that have been spent. ý A is incorrect, as planned value is the amount the project should be worth at this point in the schedule. B is incorrect; present value is the current value of future monies. D is incorrect; a capital expenditure is money spent to purchase a long-term asset, such as a building. | |
þ C. The time to recoup the monies from the project is 72 months. This is calculated by dividing the ROI of $3,500 per month into the project cost. ý A is an incorrect answer. B is incorrect; eight months is the amount of time left in the project schedule. D, five years, is also incorrect. | |
þ B. The opportunity cost is the amount of the project that was not chosen. ý A is incorrect; $5,000 is the difference between the two projects, it is not the opportunity cost. C is incorrect, as $22,000 is the amount of the project that was selected. D is an incorrect answer. | |
þ C. This is an example of variable costs. The more students that register to take the class the more the cost of the books will be. ý A is incorrect, as the cost of the book varies depending on the number of students that register for the class. B is incorrect, as the cost of each book diminishes as more books are created. A parametric cost would remain the same regardless of how many books were created. D is not correct, as this is not an example of an indirect cost. | |
þ A. This is a fixed cost expense of $890 per month—regardless of how often the piece of equipment is used. ý B is incorrect, as a parametric cost is a value used to calculate cost per use, cost per metric ton, or cost per unit. While it may appear B is a correct choice, there is no historical information mentioned to base the parametric model on. C is incorrect, as the cost does not vary within the project. D is also incorrect; this is a cost attributed directly to the project work. | |
þ C. The straight-line depreciation takes the purchase value of the item, minus the salvage price of the item, divided by the number of time periods. In this instance, it would be $10,000 minus $1,000, or $9,000. The $9,000 is divided by five years and equates to $1,800 per year. ý A, C, and D are all incorrect, as they do not reflect the correct calculation. | |
þ B. The BAC is the budget at completion, which is $290,000. ý A is incorrect, as it describes the earned value for the project. C and D are both incorrect values. | |
þ C. $26,000 is the variance. This is calculated by subtracting the actual costs of $65,000 from the earned value of $39,000. EV is calculated by taking the 30 percent completion of the project against the BAC. The project is considered to be 30 percent complete because it’s slated for ten months, is currently in month three, and is on schedule. ý A, B, and D are all incorrect calculations for the problem. | |
þ A. The earned value is calculated by multiplying the percentage of completion, 40 percent, by the BAC, which is $600,000, for a value of $240,000. ý B, C, and D are incorrect calculations of the earned value formula. | |
þ C is the correct answer. The EV of $240,000 is divided by the AC of $270,000 for a value of .89. ý A and D are incorrect calculations. B is incorrect, as the value needs a decimal. | |
þ B. The learning curve allows the cost to decrease as a result of decreased installation time as workers complete more of the installation procedure. ý Choices A, C, and D are all incorrect choices, as they do not correctly describe the learning curve in relation to time and cost. | |
þ A. Of the choices presented, historical information from a recently completed project is the most reliable source of information. ý B, while valuable, is not as proven as historical information. C is incorrect, as recollections are the least reliable source of information. D is also incorrect, though it may prove valuable in the planning process. |
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