COST MANAGEMENT

1) One common way to compute estimate at completion (EAC) is to take the

budget at completion (BAC) and:
A. Divide by SPI.
B. Multiply by SPI.
C. Multiply by CPI.
D. Divide by CPI.

2) Estimate at completion (EAC) is a periodic evaluation of:

A. Cost of work completed.
B. Value of work performed.
C. Anticipated total cost at project completion.
D. What it will cost to finish the job.

3) If earned value (EV) =350, actual cost (AC)=400, planned value (PV)=325,
what is cost variance (CV)?
A. 350
B. -75
C. 400
D. -50

4) Analogous estimating:
A. Uses bottom-up estimating techniques.
B. Is used most frequently during the executing processes of the
project.
C. Uses top-down estimating techniques.
D. Uses actual detailed historical costs.
5) The cost of choosing one project and giving up another is called:
A. Fixed cost.
B. Sunk cost.
C. Net present value (NPV).
D. Opportunity cost.

6) A schedule performance index (SPI) of 0.76 means:

A. You are over budget.
B. You are ahead of schedule.
C. You are only progressing at 76 percent of the rate originally planned.
D. You are only progressing at 24 percent of the rate originally planned.

7) Which of the following is not needed in order to come up with a project

estimate?
A. WBS
B. Network diagram
C. Risks
D. Change control procedure

8) Which of the following is an example of a parametric estimate?

A. Dollars per module
B. Learning bend
C. Bottom-up
D. CPM

9) A rough order of magnitude estimate is made during which project

management process group?
 A. Project planning
B. Project closing
C. Project executing
D. Project initiating

10) Which factor would NOT be considered when choosing between two
projects to undertake?
A. Net present value (NPV)
B. Benefit cost ratio (BCR)
C. Payback period
D. Law of diminishing returns

11) If project A has a net present value (NPV) of U.S. $30,000 and project
B has an NPV of U.S. $ 50,000, what is the opportunity cost if project B is
selected?
A. $23,000
B. $30,000
C. $20,000
D. $50,000

12) Which type of cost is team training?

A. Direct
B. NPV
C. Indirect
D. Fixed

13) Which of the following represents the estimated value of the work
actually accomplished?
A. Earned value (EV)
 B. Planned value (PV)
C. Actual cost (AC)
D. Cost variance (CV)

14) You have four projects from which to choose one. Project A is being
done over a six year period and has a net present value (NPV) of U.S.
$70,000. Project B is being done over a three year period and has an NPV of
U.S. $30,000. Project C is being done over a five year period and has an NPV
of U.S. $40,000. Project D is being done over a one year period and has an
NPV of U.S. $60,000. Which project would you choose?
A. Project A
B. Project B
C. Project C
D. Project D

15) Project A has an internal rate of return (IRR) of 21 percent. Project B

has an IRR of 7 percent. Project C has an IRR of 31 percent. Project D has an
IRR of 19 percent which of these would be the BEST project?
A. Project A
B. Project B
C. Project C
D. Project D

16) As a project manager, you are presented with the following

information on the net present value (NPV) of several potential projects.
Which project is your BEST choice?
A. Project A with an NPV of U.S. $95,000
B. Project B with an NPV of U.S. $ 120,000
C. Project C with an NPV of U.S. $20,000
D. Project D with an NPV of U.S. -$30,000
17) The seller tells you that your activities have resulted in an increase in
their costs. You should:
A. Recommend change to the project costs.
B. Have a meeting with management to find out what to do.
C. Ask the seller for supporting information.
D. Deny any wrongdoing.

18) You are asked to prepare a budget for completing a project that was
started last year and then shelved for six months. All the following would
be included in the budget EXCEPT?
A. Fixed costs
B. Sunk costs
C. Direct costs
D. Variable costs

19) To accommodate a new project in your department, you need to

move resources from one project to another. Because your department is
currently working at capacity, moving resources will inevitably delay the
project from which you move the resources. It would cause the LEAST
negative impact if you move resources from which of the following
projects?
A. Project A with a benefit cost ratio of 0.8, no project charter, and four
resources
B. Project B with a net present value of U.S. $60,000, 12 resources, and
variable costs between U.S. $1,000 and U.S. $2,000 per month
C. Project C with an opportunity cost of U.S. $ 300,000, no project
control system, and an internal rate of return of 12 percent
D. Project D with indirect cost of U.S. $20,000 and 13 resources
20) A manufacturing project has a schedule performance index (SPI) of
0.89 and a cost performance index (CPI) of 0.91. Generally, what is the BEST
explanation for why this occurred?
A. The scope was changed.
B. A supplier went out of business and a new one needed to be found.
C. Additional equipment needed to be purchased.
D. A critical path activity took longer and needed more labor hours to
complete.