CSP Exam Questions & Answers
2023/2024
A company decides to reflect the worker's compensation losses against the profit function and to
determine how many units must be sold to offset these costs. Indirect costs are five times direct costs
and there is a profit margin of 15% on each unit sold and the worker's compensation for the last year
were $90,000. What is the volume in sales needed to offset the worker's compensation losses, when the
losses are treated as production costs? - ANSWER-The profit margin is 15%, indirect cost is 5 parts of
total and direct cost is 1 part of total. Production costs are direct costs. Since the profit on the
production on the direct cost is 2.5%, a volume of $3,600,000 is required to cover the worker's comp
losses
15% ÷ 6 = 2.5% per unit
90,000 ÷ .025 = 3,600,000
A steel manufacturing plant has a $1,400,000 payroll that sufferes workers' compensation losses of
$97,000. The experience modification factor for theis plant is 1.6 and the annual premium is $88,000.
What is the loss ratio for this manufacturing firm? - ANSWER-Loss ratio = Losses / E-mod x Manual
Premium
Lr = 97,.6 × 88,000
Lr = 0.6889
Software analysts are able to predict software errors using selected statistical models. The following
information estimates error rates versus project development phases of a system. Based on this info, the
mean error rate is?
Error rate versus project development phases
Phase..............................Errors/100 object instructions
Validation......................0.597
, Integration....................0.899
Operational Demo....0.234
PerOp excercise........0.433 - ANSWER-Errors per 100 instructions
0.597+0.899+0.234+0.433=2.163
Instructions
100+100+100+100=400
2.163 errors :: 400 Instructions
1 :: 200
Accident costs and probability for the past year are reflected in the following table. What is the expected
value of accident costs?
Accident costs..................Probability
$0..............................................0.1
$5,000.....................................0.5
$10,000...................................0.3
$15,000...................................0.4 - ANSWER-The expected value of accident costs is the sum of the costs
times the probability of each occurrence.
$0 × 0.1 = $0
$5,000 × 0.5 = $2,500
$10,000 × 0.3 = $3,000
$15,000 × 0.4 = $6,000
2500+3000+6000 = $11,500
2023/2024
A company decides to reflect the worker's compensation losses against the profit function and to
determine how many units must be sold to offset these costs. Indirect costs are five times direct costs
and there is a profit margin of 15% on each unit sold and the worker's compensation for the last year
were $90,000. What is the volume in sales needed to offset the worker's compensation losses, when the
losses are treated as production costs? - ANSWER-The profit margin is 15%, indirect cost is 5 parts of
total and direct cost is 1 part of total. Production costs are direct costs. Since the profit on the
production on the direct cost is 2.5%, a volume of $3,600,000 is required to cover the worker's comp
losses
15% ÷ 6 = 2.5% per unit
90,000 ÷ .025 = 3,600,000
A steel manufacturing plant has a $1,400,000 payroll that sufferes workers' compensation losses of
$97,000. The experience modification factor for theis plant is 1.6 and the annual premium is $88,000.
What is the loss ratio for this manufacturing firm? - ANSWER-Loss ratio = Losses / E-mod x Manual
Premium
Lr = 97,.6 × 88,000
Lr = 0.6889
Software analysts are able to predict software errors using selected statistical models. The following
information estimates error rates versus project development phases of a system. Based on this info, the
mean error rate is?
Error rate versus project development phases
Phase..............................Errors/100 object instructions
Validation......................0.597
, Integration....................0.899
Operational Demo....0.234
PerOp excercise........0.433 - ANSWER-Errors per 100 instructions
0.597+0.899+0.234+0.433=2.163
Instructions
100+100+100+100=400
2.163 errors :: 400 Instructions
1 :: 200
Accident costs and probability for the past year are reflected in the following table. What is the expected
value of accident costs?
Accident costs..................Probability
$0..............................................0.1
$5,000.....................................0.5
$10,000...................................0.3
$15,000...................................0.4 - ANSWER-The expected value of accident costs is the sum of the costs
times the probability of each occurrence.
$0 × 0.1 = $0
$5,000 × 0.5 = $2,500
$10,000 × 0.3 = $3,000
$15,000 × 0.4 = $6,000
2500+3000+6000 = $11,500
