CAFM Financial Management

Question 1

Which depreciation method results in the highest book value at the end of an asset's useful life if the asset has a residual value?

Accepted Answer

Straight-line depreciation

Answer

Straight-line depreciation spreads cost evenly and stops at residual value, preserving the highest book value compared to accelerated methods.

Question 2

A fleet manager is evaluating two vehicles: Vehicle A has a 5-year TCO of $85,000 and Vehicle B has a 5-year TCO of $78,000. What additional factor should be considered before making a final decision?

Accepted Answer

Residual value and remarketing potential at end of cycle

Answer

Residual value directly affects the net cost of ownership and must be factored into TCO comparisons to identify the true least-cost option.

Question 3

What is the primary purpose of a fleet charge-back system?

Accepted Answer

To allocate vehicle operating costs to the departments that use them

Answer

A charge-back system allocates fleet costs to user departments, promoting cost accountability and accurate departmental budgeting.

Question 4

When calculating a vehicle's break-even mileage for replacement, which cost relationship is being analyzed?

Accepted Answer

Fixed costs versus variable costs

Answer

Break-even mileage analysis compares fixed ownership costs against variable operating costs to determine the optimal replacement point.

Question 5

A fleet department receives a budget variance report showing a 15% unfavorable fuel variance. What is the most appropriate first step?

Accepted Answer

Analyze the cause by reviewing fuel consumption data, pricing changes, and mileage

Answer

Root cause analysis of fuel variance data is required before taking corrective action to determine whether the issue is price-driven, consumption-driven, or mileage-driven.

CAFM - Certified Automotive Fleet Manager Practice Test

CAFM - Certified Automotive Fleet Manager Practice Test

CAFM Financial Management