Fleet Financial Management Flashcards
7 cards from real CAFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Fleet Financial Management flashcards as text
A fleet manager is calculating cost per mile for a vehicle that drove 18,000 miles last year with total costs of $9,900. What is the cost per mile?
Answer: $0.55
Cost per mile = Total costs ÷ Miles driven = $9,900 ÷ 18,000 = $0.55 per mile.
In an open-end fleet lease, who bears the risk if the vehicle's actual market value at lease end is lower than the projected residual value?
Answer: The lessee (fleet company)
In an open-end lease, the lessee is responsible for any shortfall between the actual market value and the guaranteed residual value at lease end.
Which variance analysis would a fleet manager use to determine why actual fuel costs exceeded the budgeted amount?
Answer: Volume variance and price variance
Fuel cost variances are typically split into volume variance (more miles driven than planned) and price variance (higher fuel price per gallon than budgeted).
A fleet manager is comparing two vehicles for acquisition. Vehicle A has a lower purchase price but higher maintenance costs over 5 years. The best financial comparison method is:
Answer: Calculate total cost of ownership for both over the same period
Total cost of ownership (TCO) over a consistent time period is the correct method, as it captures all costs including acquisition, fuel, maintenance, and disposal.
What is the purpose of a fleet remarketing strategy in financial management?
Answer: To maximize proceeds from vehicle disposal and reduce holding costs
Remarketing strategies optimize when and how vehicles are sold to maximize resale value and minimize the time and cost of holding depreciating assets.
Section 179 of the IRS tax code is significant for fleet managers because it allows businesses to:
Answer: Immediately expense the full cost of qualifying vehicles in the year of purchase
Section 179 permits businesses to deduct the full purchase price of qualifying vehicles in the acquisition year rather than depreciating over multiple years, subject to annual limits.
A fleet manager is reviewing a proposal to outsource vehicle maintenance. The financial break-even point is best determined by:
Answer: Calculating the volume of repairs at which outsourced costs equal in-house costs
Break-even analysis identifies the maintenance volume at which the fixed costs of in-house operations equal the variable costs of outsourcing, guiding the make-or-buy decision.