COST MANAGEMENT EXAMINATION QUESTION AND
CORRECT ANSWER WITH EXPLANATION GRADED A+
STUDY GUIDE SOUTHERN NEW HAMPSHIRE UNIVERSITY
1. Project cost management is the process of:
A. Planning and controlling project costs
B. Ignoring budgets
C. Hiring staff only
D. Designing products
Answer: A
Rationale: It focuses on cost planning and control.
2. The main goal of cost management is to:
A. Complete project within budget
B. Increase spending
C. Ignore costs
D. Delay expenses
Answer: A
Rationale: Budget control is key objective.
3. Cost estimation involves:
A. Predicting project costs
B. Ignoring finances
C. Random guessing
D. Hiring workers
Answer: A
Rationale: Forecasting costs.
4. Cost budgeting is:
A. Allocating estimated costs to activities
B. Ignoring budget
C. Increasing expenses
D. Eliminating tracking
Answer: A
Rationale: Distribution of funds.
5. Cost control is:
A. Monitoring and managing cost changes
, B. Ignoring spending
C. Increasing costs
D. Eliminating reports
Answer: A
Rationale: Ensuring budget compliance.
6. Direct costs include:
A. Costs directly tied to project work
B. Office decoration only
C. Marketing only
D. Taxes only
Answer: A
Rationale: Directly attributable costs.
7. Indirect costs are:
A. Shared organizational expenses
B. Direct labor only
C. Material costs only
D. Task-specific costs
Answer: A
Rationale: Overhead costs.
8. Fixed cost is:
A. Constant regardless of output
B. Varies with production
C. Unknown cost
D. Zero cost
Answer: A
Rationale: Does not change with activity level.
9. Variable cost changes with:
A. Level of production
B. Time only
C. HR only
D. Marketing only
Answer: A
Rationale: Depends on output volume.
10. Sunk cost is:
A. Past cost that cannot be recovered
, B. Future cost
C. Profit
D. Budget reserve
Answer: A
Rationale: Irrecoverable expense.
11. Opportunity cost is:
A. Value of the next best alternative
B. Actual spending
C. Fixed cost
D. Profit margin
Answer: A
Rationale: Lost alternative value.
12. Contingency reserve is:
A. Budget for known risks
B. Profit margin
C. Salary fund
D. Marketing budget
Answer: A
Rationale: Risk buffer funds.
13. Management reserve is:
A. Funds for unknown risks
B. Daily expenses
C. Fixed salary
D. Sales revenue
Answer: A
Rationale: Unplanned risk buffer.
14. Cost baseline is:
A. Approved time-phased budget
B. Draft estimate
C. HR plan
D. Risk plan
Answer: A
Rationale: Reference budget.
15. Earned Value Management (EVM) integrates:
A. Scope, schedule, and cost
CORRECT ANSWER WITH EXPLANATION GRADED A+
STUDY GUIDE SOUTHERN NEW HAMPSHIRE UNIVERSITY
1. Project cost management is the process of:
A. Planning and controlling project costs
B. Ignoring budgets
C. Hiring staff only
D. Designing products
Answer: A
Rationale: It focuses on cost planning and control.
2. The main goal of cost management is to:
A. Complete project within budget
B. Increase spending
C. Ignore costs
D. Delay expenses
Answer: A
Rationale: Budget control is key objective.
3. Cost estimation involves:
A. Predicting project costs
B. Ignoring finances
C. Random guessing
D. Hiring workers
Answer: A
Rationale: Forecasting costs.
4. Cost budgeting is:
A. Allocating estimated costs to activities
B. Ignoring budget
C. Increasing expenses
D. Eliminating tracking
Answer: A
Rationale: Distribution of funds.
5. Cost control is:
A. Monitoring and managing cost changes
, B. Ignoring spending
C. Increasing costs
D. Eliminating reports
Answer: A
Rationale: Ensuring budget compliance.
6. Direct costs include:
A. Costs directly tied to project work
B. Office decoration only
C. Marketing only
D. Taxes only
Answer: A
Rationale: Directly attributable costs.
7. Indirect costs are:
A. Shared organizational expenses
B. Direct labor only
C. Material costs only
D. Task-specific costs
Answer: A
Rationale: Overhead costs.
8. Fixed cost is:
A. Constant regardless of output
B. Varies with production
C. Unknown cost
D. Zero cost
Answer: A
Rationale: Does not change with activity level.
9. Variable cost changes with:
A. Level of production
B. Time only
C. HR only
D. Marketing only
Answer: A
Rationale: Depends on output volume.
10. Sunk cost is:
A. Past cost that cannot be recovered
, B. Future cost
C. Profit
D. Budget reserve
Answer: A
Rationale: Irrecoverable expense.
11. Opportunity cost is:
A. Value of the next best alternative
B. Actual spending
C. Fixed cost
D. Profit margin
Answer: A
Rationale: Lost alternative value.
12. Contingency reserve is:
A. Budget for known risks
B. Profit margin
C. Salary fund
D. Marketing budget
Answer: A
Rationale: Risk buffer funds.
13. Management reserve is:
A. Funds for unknown risks
B. Daily expenses
C. Fixed salary
D. Sales revenue
Answer: A
Rationale: Unplanned risk buffer.
14. Cost baseline is:
A. Approved time-phased budget
B. Draft estimate
C. HR plan
D. Risk plan
Answer: A
Rationale: Reference budget.
15. Earned Value Management (EVM) integrates:
A. Scope, schedule, and cost
