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Assignmen II (1)

Uploaded by

Gulala Garbi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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September 5/2023

Technolink College
Costing and and Financial Management of Projects

Chapter two
1.Part
One ofI:the
Thefollowing is NOT
following true about project
multiple-choice costwill
questions management?
be helpful in reviewing the principles of
A. Itthis
is a chapter.
part of project management. B. It covers the scope of cost estimations and budgeting.
C. It also covers project cost control. D. None of the above
E. All of the above
2. One of the following is NOT a main type of cost in cost management.
A. Direct materials B. Direct labor C. Cost Overheads D. Administrative and General E. None
3. Which of the following combinations of costs make up prime cost?
a. Direct materials cost and manufacturing overhead cost.
b. Direct labor cost and manufacturing overhead cost.
c. Marketing cost and administrative costs.
d. Direct materials cost and direct labor cost. e. A and B are correct.
4. The project’s cost management’s task in cost estimating is;
a. to examine the different possibilities to spend costs in various project steps.
b. to record whatever cost incurred.
c. to report whatever cost recorded and no attempt for variance analysis.
d. All of the above e. None of the above.

5. Which one of the following document does not provides necessary information to facilitate
the creation of the cost estimate is;
a. the Work Breakdown Structure(WBS).
b. the amounts of all resources which are required to perform that activity.
c. the different possibilities to spend costs in various project steps.
d. All of the above
e. None of the above
September 5/2023

6. One of the following is not considered in the dimensions of Financial Analysis,


a. Investment cost estimation b. Revenue estimation
c. Estimation of production costs & expenses d. Projected profitability analysis
e. None of the above
7. One is different from the rest investment evaluation methods.
a. Net present value b. Internal rate of return.
c. Accounting rate of return d. profitability index
e. None of the above.
8. refers to the cost of feasibility studies; cost-benefit analyses; system
analyses; detail design and development; fabrication, assembly, and test of engineering models;
initial product evaluation; and associated documentation.
a. Production costs.
b. Operation and maintenance cost.
c. Construction cost
d. Research and Development cost
e. all of the above.
9. is the least precise of all capital budgeting methods
because the calculations are in dollars and not adjusted for the time value of money.
a. Net present value(NPV) method
b. Residual Income
c. Economic Value added.
d. Payback period
e. none of the above.
10. Which of the following costs would be included both as part of prime cost and as part
of conversion cost?
a. Direct materials.
b. Direct labor.
c. Manufacturing overhead.
d. None of these.
E. None of the above
September 5/2023

Part II. Work out and Computations.

1. Describe the process of cost management i.e the process required to create a comprehensive
project cost plan.
2. Describe the issue of earned value management (EVM) which required for essential and
proactive financial decision making by the project manager. Try to employ diagrams in
your description.
3. Differentiate Cost Estimating and Pricing in cost management of projects.
4. “Cost management information includes both financial and nonfinancial information critical to
the firm’s success.” Elaborate it in detail.
5. Michael Porter argues a firm cannot be at the same time a cost leader and a differentiator. Do
you think a firm could be a cost leader and then become a differentiator, or vice versa?

Part III: Problem.

1. The following are projects for appraisal and selection by a private investor. The projects are not
mutually exclusive. But the investor needs to utilize scarce financial resources to the maximum
benefit possible.
Year A B C
0 (300) (500) (800)
1 150 150 200
2 150 150 200
3 50 200 300
4 50 200 100
5 50 150 700
a. Using payback period as a criterion for evaluation, which project shall be undertaken?
b. Using Net present value method at 12% rate of return, which project shall be preferred?
Compute and indicate the preference.
c. using the Profitability index method at 12% rate of return, which project shall be
preferred? Compute and indicate the preference.

END

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