Question 1

Which worker's wages would constitute a direct cost for a construction project?
A)The project's cost accountant
B)The brick mason
C)The architect's assistant
D)The foreman

Accepted Answer

The brick mason's wages would constitute a direct cost for a construction project because they are directly involved in the construction process and contribute to the final product. The project's cost accountant, the architect's assistant, and the foreman may also be necessary for the project but their wages would be considered indirect costs as their contributions are more indirect and administrative in nature.

Question 2

Three workers complete a full 8-hour day finishing concrete for a terrace.All three workers are paid $12 an hour and the job bills to the customer for $450.What are the total direct labor costs?
A)$450
B)$12
C)$288
D)$96

Accepted Answer

Since all three workers worked for 8 hours, the total direct labor costs can be calculated by:
Total direct labor costs = Number of workers x Hours worked x Hourly rate
Total direct labor costs = 3 x 8 x 12 = $288
Therefore, the correct answer is C. Option A is incorrect because it represents the amount billed to the customer. Options B and D are incorrect because they represent the hourly rate of one worker for one hour.

Question 3

Material is an example of a cost that is recurring,variable and direct.

Accepted Answer

Material cost is an example of a recurring cost because it is a cost that is incurred repeatedly, for example on a monthly basis. It is also a variable cost because it depends on the level of production, meaning as production increases, so does material cost. Finally, it is a direct cost because it can be traced directly to the production of a specific product or service.

Question 4

Which of these is typically a recurring cost?
A)Preliminary market analysis
B)Personnel training
C)Outplacement services
D)Logistics

Accepted Answer

Logistics is typically a recurring cost as it involves the ongoing expenses related to the transportation and storage of goods.

Question 5

Direct costs are those clearly assigned to the aspect of the project that generated the cost.

Accepted Answer

Direct costs are costs that can be specifically traced to a particular project, activity, or cost object. These costs are assigned to the specific aspect of the project or activity that generated them. Examples include labor costs, materials costs, and equipment costs.

Question 6

Unplanned costs incurred when steps are taken to speed up a project's completion are called:
A)Expedited costs.
B)Accelerated costs.
C)Pass-through costs.
D)Normal costs.

Accepted Answer

Expedited costs refer to additional expenses incurred to hasten the completion of a project, often due to unforeseen delays or the need to meet a deadline.

Question 7

An expedited cost is one that does not vary with respect to their usage.

Accepted Answer

Expedited costs refer to additional expenses incurred to speed up a process or delivery, not to costs that remain constant regardless of usage.

Question 8

A systems analyst is paid at the rate of $50/hour and will be needed for 40 hours.Her employer uses an overhead multiplier of 60% and does not factor in personal time.Her total direct labor cost should be billed at:
A)$2,000.
B)$3,200.
C)$1,250.
D)$4,500.

Accepted Answer

Direct labor cost = rate x hours = $50/hour x 40 hours = $2,000
Overhead cost = direct labor cost x overhead multiplier = $2,000 x 60% = $1,200
Total cost = direct labor cost + overhead cost = $2,000 + $1,200 = $3,200

Question 9

The charge that is most likely a fixed cost is for:
A)Materials.
B)Equipment rental.
C)Direct labor.
D)Utilities.

Accepted Answer

Equipment rental is typically a fixed cost because it is a set amount that is paid regardless of the level of production or usage.

Question 10

What are four major categories of costs? Provide descriptions for each category.

Accepted Answer

The answer of What are four major categories of costs?...

Question 11

Which of these indirect costs is typically classified as a selling or administrative cost?
A)Secretarial support
B)Utilities
C)Insurance
D)Depreciation

Accepted Answer

Secretarial support is typically a cost associated with selling or administrative activities such as preparing and sending out customer invoices or taking phone calls from customers. Utilities and Insurance are more commonly classified as overhead or operating costs, while Depreciation is an indirect cost associated with production or capital expenditures.

Question 12

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

Accepted Answer

The direct labor cost per hour is calculated as follows:

Hourly wage + Overhead charge + Personal time allowance
$15.00 + ($15.00 x 1.45) + ($15.00 x 1.15)
= $15.00 + $21.75 + $17.25
= $54.00 per hour

For an 8-hour work day, the total direct labor cost would be:

Total direct labor cost = Direct labor cost per hour x Number of hours worked
= $54.00 x 8
= $432.00

Therefore, the best choice is C) $200.10.

Question 13

Which of these is typically a nonrecurring cost?
A)Site study
B)Labor
C)Material
D)Sales

Accepted Answer

Site study is typically a nonrecurring cost as it is a one-time expense incurred at the beginning of a project to assess the site's suitability and potential challenges. Labor, materials, and sales, on the other hand, are recurring costs that are incurred throughout the project's life cycle.

Question 14

The term expedited cost has the same meaning as crashing cost in the project management milieu.

Accepted Answer

Both expedited cost and crashing cost refer to the additional expenses incurred in order to complete a project faster than initially planned.

Question 15

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.

Accepted Answer

Variable costs are costs that vary with the level of output or production. The cost of materials used in production is a classic example of a variable cost. Leased capital equipment, salaries, and health insurance are examples of fixed costs, which do not vary with the level of output or production.

Question 16

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.

Accepted Answer

A normal cost is a cost that was planned or budgeted for in the original plan. Therefore, adhering to the aggressive baseline plan does not result in additional unexpected costs, making it a normal cost. The other options, such as overtime, expedited shipments, or additional temporary workers, are considered abnormal costs because they are unexpected and not originally planned for.

Question 17

Which of the following is a direct cost?
A)Labor
B)Rent
C)Depreciation on equipment
D)Health benefits

Accepted Answer

Direct costs are costs that can be directly linked to a particular project or product. Labor is a direct cost as it can be traced back to a specific project or product. Rent, depreciation on equipment, and health benefits are indirect costs as they cannot be directly attributed to a specific project or product.

Question 18

Provide examples and discuss the differences between direct and indirect costs.

Accepted Answer

The answer of Provide examples and discuss the differences between...

Question 19

Which of these indirect costs is typically classified as an overhead cost?
A)Advertising
B)Shipping
C)Sales commissions
D)Taxes

Accepted Answer

Taxes are typically classified as an overhead cost because they are not directly tied to the production of goods or services but are necessary for the overall operation of the business.

Question 20

The gentleman farmer and surrealist aficionado commissioned a mural on barn that was an homage to Salvador Dalí's Persistence of Memory with a few farm animals included.The project would require the services of a senior muralist,a junior muralist,and a gofer.The senior muralist has an annual salary of $120,000,the junior muralist draws an annual salary of $75,000,and the gofer makes $30,000 per year.It is anticipated that the project will require 25 hours of senior muralist time,40 hours of junior muralist time,and 60 hours of gofer time.Overhead charges vary by position;the gofer has a lower overhead rate (30%)than the two muralist positions (50%).Use 2080 hours as an estimate for the number of hours in a year and a 15% factor for personal time.What is the total direct labor cost for the project?

Accepted Answer

The answer of The gentleman farmer and surrealist aficionado commissioned...

Quiz 8: Cost Estimation and Budgeting

Which worker's wages would constitute a direct cost for a construction project?

Three workers complete a full 8-hour day finishing concrete for a terrace.All three workers are paid $12 an hour and the job bills to the customer for $450.What are the total direct labor costs?

Material is an example of a cost that is recurring,variable and direct.

Which of these is typically a recurring cost?

Direct costs are those clearly assigned to the aspect of the project that generated the cost.

Unplanned costs incurred when steps are taken to speed up a project's completion are called:

An expedited cost is one that does not vary with respect to their usage.

A systems analyst is paid at the rate of $50/hour and will be needed for 40 hours.Her employer uses an overhead multiplier of 60% and does not factor in personal time.Her total direct labor cost should be billed at:

The charge that is most likely a fixed cost is for:

What are four major categories of costs? Provide descriptions for each category.

Which of these indirect costs is typically classified as a selling or administrative cost?

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?

Which of these is typically a nonrecurring cost?

The term expedited cost has the same meaning as crashing cost in the project management milieu.

You are probably looking at a bill for a variable cost when you are paying for:

A normal cost is incurred when:

Which of the following is a direct cost?

Provide examples and discuss the differences between direct and indirect costs.

Which of these indirect costs is typically classified as an overhead cost?