Cost Estimation and Budgeting

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Chapter 8 Cost Estimation and Budgeting 8.1 True/False 1) Direct costs are those clearly assigned to the aspect of the project that generated the cost. Answer TRUE 2) Material is an example of a cost that is recurring, variable and direct. Answer TRUE 3) An expedited cost is one that does not vary with respect to their usage. Answer FALSE 4) An order of magnitude estimate is usually more accurate than a ballpark estimate. Answer FALSE 5) Comparative estimates are more accurate than definitive estimates when applied to the same project. Answer TRUE 6) A learning rate of 90 means that for every doubling of output, the time required by the activity falls by 10. Answer FALSE 7) There is a tendency for different…show more content…
Her employer uses an overhead multiplier of 60 and does not factor in personal time. Her total direct labor cost that should be billed at A) 2,000. B) 3,200. C) 1,250. D) 4,500. 7) 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 8) Which of these is typically a recurring cost A) preliminary market analysis B) personnel training C) outplacement services D) logistics 9) Which of these is typically a nonrecurring cost A) site study B) labor C) material D) sales 10) The charge that is most likely a fixed cost is for A) materials. B) equipment rental. C) direct labor. D) utilities. 11) 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. 12) 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. 13) Unplanned costs incurred when steps are taken to speed up projects completion are called A) expedited costs. B) accelerated costs. C) pass-through costs. D) normal costs . 14) A key for developing project cost estimates is to A) cost the project while considering the total package. B) cost
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