Question 1

Organizational tradition has little or no impact on the firm's project budgeting.

Accepted Answer

A) True 
 B)False  False

Question 2

Stefan, a project manager in a publishing company, has undertaken a project to translate a book in French into English and to sell a million copies. He estimates that the cost of the materials will be $6000 and the project will require 30 hours of labor at $50 per hour. If the overheads for the project are estimated at a rate of 50 percent of the labor costs, the total cost of the project will be:

Accepted Answer

A)  $1080. 
B)  $1,500. 
C)  $4,500. 
D)  $7,800. 
E)  $8,250. 
A)  $1080. 
B)  $1,500. 
C)  $4,500. 
D)  $7,800. 
E)  $8,250. E

Question 3

Budgeting a project is often more difficult than budgeting routine activities.

Accepted Answer

A) True 
 B)False  True

Question 4

A disaster is an event that may have an extraordinarily high cost if it occurs, but has a very low probability of occurring.

Accepted Answer

A) True 
 B)False

Question 5

With top-down budgeting, overlooking a small but important task can often cause a serious budgetary problem.

Accepted Answer

A) True 
 B)False

Question 6

Learning curve theory states that performance of labor per unit will improve by a percentage each time production increases by the same percentage.

Accepted Answer

A) True 
 B)False

Question 7

Project budget is nothing more than the project plan, based on the WBS, expressed in monetary terms.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is not true about a firm and its project accounting?

Accepted Answer

A)  each firm has its own rules with regard to the allocation of overhead 
B)  most firms must comply with the Sarbanes-Oxley Act 
C)  the project manager must rely on the accounting department to make special allowances for his/her project 
D)  most firms have their own accounting idiosyncrasies 
E)  unexpected charges may suddenly appear when the PM least expects it 
A)  each firm has its own rules with regard to the allocation of overhead 
B)  most firms must comply with the Sarbanes-Oxley Act 
C)  the project manager must rely on the accounting department to make special allowances for his/her project 
D)  most firms have their own accounting idiosyncrasies 
E)  unexpected charges may suddenly appear when the PM least expects it

Question 9

Define top-down and bottom-up budgeting.

Accepted Answer

Budgeting is the process of forecasting

Question 10

A budget is a plan for allocating resources to project activities.

Accepted Answer

A) True 
 B)False

Question 11

Pogmon Solutions, a computer manufacturer, is introducing a new product-a high-end gaming laptop. Its technicians take 21 hours to produce the first unit of the laptop, and the company follows a 78 percent learning curve. Given this information, the eighth unit of the laptop would approximately require _____.

Accepted Answer

A)  8 hours 
B)  6 hours 
C)  5 hours 
D)  10 hours 
E)  2 hours 
A)  8 hours 
B)  6 hours 
C)  5 hours 
D)  10 hours 
E)  2 hours

Question 12

Sean, a project manager, has to prepare the budget for a new project. He estimates the overall project cost by estimating the costs of the major tasks. He then gives these estimates to Raphael, an engineer who works under Sean, to split up the costs for each of the activities involved in accomplishing the major tasks. In this scenario, Sean is using _____.

Accepted Answer

A)  top-down budgeting 
B)  bottom-up budgeting 
C)  agile project budgeting 
D)  dynamic matrix budgeting 
E)  lateral budgeting 
A)  top-down budgeting 
B)  bottom-up budgeting 
C)  agile project budgeting 
D)  dynamic matrix budgeting 
E)  lateral budgeting

Question 13

How can you handle changes in the project budget?

Accepted Answer

The best approach to handle changes in a

Question 14

Samuel, a project manager, and Martha, his subordinate, are working on a project. In the budgeting phase, Samuel is responsible for estimating the costs for Level 1 tasks and Martha is responsible for estimating the costs for Level 2 tasks. While collating the data, Samuel finds that the total estimated cost for Level 1 tasks is much lower than the total estimated cost for Level 2 tasks. Which of the following is a reason for this discrepancy?

Accepted Answer

A)  Subordinates tend to have more experience than higher management in allocating costs. 
B)  Project managers are naturally pessimistic and want to build in protection for everything that might possibly go wrong. 
C)  Subordinates are usually optimistic and never admit that details have been forgotten or that anything can or will go wrong. 
D)  Jobs always look easier, faster, and cheaper to the project manager than to the subordinates who have to do them. 
E)  Project managers and subordinates are often dishonest in their estimations. 
A)  Subordinates tend to have more experience than higher management in allocating costs. 
B)  Project managers are naturally pessimistic and want to build in protection for everything that might possibly go wrong. 
C)  Subordinates are usually optimistic and never admit that details have been forgotten or that anything can or will go wrong. 
D)  Jobs always look easier, faster, and cheaper to the project manager than to the subordinates who have to do them. 
E)  Project managers and subordinates are often dishonest in their estimations.

Question 15

The project budget acts as a project control.

Accepted Answer

A) True 
 B)False

Question 16

Victor, a project manager, is constructing a budget for a project to construct a house. He estimates that the materials will cost $100,000 and the project will require 15 people working 6 hours a day to ensure timely completion. He estimates the cost of labor at $15 per hour. Additional costs, safety equipment, and overheads are marked at a rate of 50 percent of direct labor. In this scenario, the total cost of the project will be _____.

Accepted Answer

A)  $120,000 
B)  $102,025 
C)  $100,090 
D)  $100,900 
E)  $110,510 
A)  $120,000 
B)  $102,025 
C)  $100,090 
D)  $100,900 
E)  $110,510

Question 17

Learning curve theory states that performance of labor per unit will improve by a fixed percentage each time production doubles.

Accepted Answer

A) True 
 B)False

Question 18

Briefly contrast the three different perspectives cost can be viewed from.

Accepted Answer

In the process of gaining familiarity wi

Question 19

Expected value is a tool for risk analysis.

Accepted Answer

A) True 
 B)False

Question 20

Traditional organizational budgets are task-oriented, rather than activity-oriented.

Accepted Answer

A) True 
 B)False

Organizational tradition has little or no impact on the firm's project budgeting.

Budgeting a project is often more difficult than budgeting routine activities.

A disaster is an event that may have an extraordinarily high cost if it occurs, but has a very low probability of occurring.

With top-down budgeting, overlooking a small but important task can often cause a serious budgetary problem.

Learning curve theory states that performance of labor per unit will improve by a percentage each time production increases by the same percentage.

Project budget is nothing more than the project plan, based on the WBS, expressed in monetary terms.

Which of the following statements is not true about a firm and its project accounting?

Define top-down and bottom-up budgeting.

A budget is a plan for allocating resources to project activities.

How can you handle changes in the project budget?

The project budget acts as a project control.

Learning curve theory states that performance of labor per unit will improve by a fixed percentage each time production doubles.

Briefly contrast the three different perspectives cost can be viewed from.

Expected value is a tool for risk analysis.

Traditional organizational budgets are task-oriented, rather than activity-oriented.

The World of Project Management

The Manager, the Organization, and the Team

Planning the Project

Scheduling the Project

Allocating Resources to the Project

Monitoring and Controlling the Project

Evaluating and Terminating the Project

Filters

Exam 4: Budgeting the Project

Organizational tradition has little or no impact on the firm's project budgeting.

Budgeting a project is often more difficult than budgeting routine activities.

A disaster is an event that may have an extraordinarily high cost if it occurs, but has a very low probability of occurring.

With top-down budgeting, overlooking a small but important task can often cause a serious budgetary problem.

Learning curve theory states that performance of labor per unit will improve by a percentage each time production increases by the same percentage.

Project budget is nothing more than the project plan, based on the WBS, expressed in monetary terms.

Which of the following statements is not true about a firm and its project accounting?

Define top-down and bottom-up budgeting.

A budget is a plan for allocating resources to project activities.

How can you handle changes in the project budget?

The project budget acts as a project control.

Learning curve theory states that performance of labor per unit will improve by a fixed percentage each time production doubles.

Briefly contrast the three different perspectives cost can be viewed from.

Expected value is a tool for risk analysis.

Traditional organizational budgets are task-oriented, rather than activity-oriented.

The World of Project Management

The Manager, the Organization, and the Team

Planning the Project

Scheduling the Project

Allocating Resources to the Project

Monitoring and Controlling the Project

Evaluating and Terminating the Project

Filters