Exam 7: Budgeting and Cost Estimation

A work element in the project plan requires 50 hours of labor each by four carpenters. The carpenters are paid $15 per hour and incur an overhead rate equal to 80 percent of their direct labor charges. Based on this data, the appropriate cost is __________.

The determination of costs for a new process should utilize a __________, or operations sequence sheet which describes the operation in which the new process would be used.

A budget strategy that is based on collecting the judgments and experiences of top and middle managers is referred to as the __________.

The project's budget should __________.

Identify the statement that is not correct regarding a project budget.

Using the data from problem 31, the appropriate cost is __________ if the carpenters consume 10 percent of the workday performing personal activities.

The pattern of deviations in cost and usage used for exception reporting to management is called __________.

An easy method of evaluating risk in certain situations by modifying project parameters and evaluating the corresponding changes is __________.

Each time the output doubles, the worker hours per unit decrease to a fixed percentage of their previous value. That percentage is called the __________ rate.

__________ budgeting allows income and expenditures to be aggregated across projects.

The budget process generally begins when the top management invites each division to submit a__________ for the upcoming year.

You have been asked to estimate the costs for a project to build an industrial power plant. Based on historical data, the steam turbine accounts for 30 percent of the total costs for the plant. If the steam turbine costs $300,000, the expected top-down estimated cost for this project would be __________.

Suggests some reasons why an organization would support projects that show a significant incremental profit over direct costs but are not profitable when costs fully accounted for.

Describe the top-down budgeting process.

The pattern of constraints in a budget embodies organizational __________.

Identify some of the common problems faced by the project budgeter.

Suppose that a person requires 60 minutes to complete a work element on the first attempt. On the second attempt, the work element is completed in 48 minutes. The learning rate for this person is __________% for this work element.

If a project budget is under funded, it will often __________.

___________ costs are not associated with any specific product or class of products and are typically charged as a fixed percentage of some direct cost.

__________ relies on well-known statistical correlations between various factors such as the total cost of a house relative to the square feet of living area.