CHAPTER 7 QUIZ

Which of the following is true of a rough order of magnitude estimate? a) It is a type of estimate that is done in the final stages of a project b) It provides an estimate of what a project will cost c) Its timeframe is always less than a year prior to project completion d) It is used to allocate money into an organization's budget

It provides an estimate of what a project will cost

______ uses project characteristics in a mathematical model to estimate project costs. a) Rough order of magnitude estimating b) Parametric estimating c) bottom-up estimating d) Analogous estimating

Parametric estimating

Which of the following is most likely to be a reason for inaccuracies in information technology cost estimates? a) Estimates take a long time to be worked out b) People lack estimating experience. c) Human beings are biased toward overestimation d) Only software development provides the scope for estimates to be accurate

People lack estimating experience.

Which of the following types of estimate use the actual cost of a previous, similar project as the basis for estimating the cost of the current project? a) bottom - up- estimate b) analogus estimate c) parametric estimate d) definitive estimate

analogus estimate

If the cost estimate for a project is a basis for contract awards and performance reporting, it should be a(n) _____ estimate and as accurate as possible. a) budgetary b) definitive c) rough order of magnitude d) analogous

definitive

______ involves allocating the overall cost estimate to individual work items to establish a baseline for measuring performance. a) Finalising policies for project costs B) estimating costs c) controlling costs d) determining the budget

determining the budget

Newtech Inc. hires John for the position of a software programmer to work on their new project. Salary paid to John by Newtech Inc. would be an example of _____ costs. a) direct b) indirect c) sunk d) intangible

direct

Which of the following is an input of the process of controlling costs? a) work performance data b) change request c) cost forecast d) scope baseline

work performance data

Soles is a footwear company which has recently set up its store in Ambrosia. To manufacture its products, Soles incurs a range of different costs. Which of the following would be an example of an indirect cost? a) Cost of machines to produce shoes b) Salary paid to factory workers c) Electricity used to run its factories d) Cost of leather used to manufacture shoes

Electricity used to run its factories

A cost estimation tool which involves estimating individual work items or activities and summing them to get a project total is known as a(n) _____ estimate. a) definitive b) rough order of magnitude c) budgetary d) ballpark

budgetary

A cost estimation tool which is used to allocate money into an organization's budget is known as a _____ estimate. a) definitive b) rough order of magnitude c) budgetary d) ballpark

budgetary

A _____ estimate is used for making many purchasing decisions for which accurate estimates are required and for estimating final project costs. a)

definitive

Which of the following involves developing an approximation of the costs of resources needed to complete a project? a) estimating cost b) controlling cost c) finalising the baseline d) determining the budget cost

estimating cost

_____ are those costs that are difficult to measure in monetary terms. a) fixed cost b) direct cost c) tangible cost d) intagible cost

intangible cost

The process of controlling costs primarily involves: a) determining the policies for project costs. b) managing changes to the project budget c) finalizing the procedures for project costs. d) determining a basis for estimates.

managing changes to the project budget

Indirect costs are: a) directly related to performing the project. b) those that can be easily controlled by managers c) not directly related to the products or services of a project. d) those that cannot be allocated to projects.

not directly related to the products or services of a project.

Profits may be defined as: a) revenues plus expenses b) revenues minus expenditures c) expenses plus net income d) cost plus revenue

revenues minus expenditures

Good Earth, a company manufacturing packaged food products, sets up its stores in Baltonia. However, a year later, the company closes the store down due to high operating costs. In such a scenario, the money spent in paying for the rent of the store in Baltonia would be an example of _____ costs. a) sunk b) intangible c) direct d) recurring

sunk

Cost variance is: a) the rate of performance minus earned value. b) the planned value plus actual costs. c) the earned value minus the actual cost d) the planned value minus the rate of performance.

the earned value minus the actual cost

The first step in project cost management is: a) to allocate project cost estimates to individual material resources. b) to plan how costs will be managed c) to control project costs and monitor cost performance. d) to develop several estimates of costs for different types of resources

to plan how costs will be managed.

Which of the following is true of earned value? a) It is an estimate of the value of the physical work actually completed. b) It is also known as the planned value c) It is the actual cost plus the planned cost d) It is based solely on the total cost estimate to be spent on an activity

It is an estimate of the value of the physical work actually completed.

The cost performance index (CPI): a) bottom - ups- estimate b) analogus estimate c) parametric estimates d) definitive estimates

analogus estimate

One of the main outputs of the _____ process is a cost baseline. a) cost estimating b) cost budgeting c) cost controlling d) cost planning

cost budgeting

The main goal of the _____ process is to produce a cost baseline for measuring project performance and project funding requirements. a) cost planning b) cost controlling c) cost estimating d) cost budgeting

cost budgeting

Which of the following reserves allows for future situations that are unpredictable? a) They allow for future situations that can be partially planned for b) They allow for dollar amounts to be used to cover existing, fixed costs c) They are also known as unknown unknowns. d) They are not included in a cost baseline

they allow for future situations that can be partially planned for