Question 1

Management perceives strong competition for the project being bid, but very much wants to be awarded the contract. As a result what action are they likely to take?

Options :

A : All of the Answers are correct

B : Direct the cost to be reduced

C : Reduce the general and administrative cost

D : Reduce the profit margin

Answer: A

Question 2

In a manufacturing operation, at 100 percent of capacity, annual costs are as follows:

Fixed expenses $5,203,440

Variable expenses $7,091,040

Semi-variable expenses $6,217,750

Sales $26,385,480

Given that semi-variable expenses at zero production equal 30% of such expenses at 100% of capacity,

the respective shutdown and break-even points would be:

Options :

A : 12.5% shutdown point and 36.6% break-even point

B : Cannot be determined from the given information

C : 47.3% shutdown point and 12.5% break-even point

D : 12.5% shutdown point and 47.3% break-even point

Answer: D

Question 3

An information-gathering technique that is not used in risk identification is:

Options :

A : Development of Risk Management Plans

B : Expert Opinion

C : Brainstorming

D : Questionnaire surveys

Answer: A

Question 4

Which of the following is a non-cash outlay associated with a process manufacturing project?

Options :

A : Depreciation expenses

B : Corporate federal income taxes

C : Interest expenses

D : Operating expenses such as labor and material

Answer: A

Question 5

The operating cost in the first year is $100,000. Escalation is expected to be 3% per year. What is the estimated operating cost in the fifth year?

Options :

A : $112,551

B : $112,000

C : $100,000

D : $115,000

Answer: A