CAFM Financial Management & Budgeting 3

Question 1

A fleet manager wants to compare the true long-term cost of owning versus leasing 20 sedans. The BEST analytical tool is:

Accepted Answer

Total cost of ownership (TCO) analysis

Answer

TCO analysis captures all acquisition, operating, maintenance, and disposal costs over the vehicle lifecycle, enabling a fair own-vs-lease comparison.

Question 2

Which depreciation method results in the HIGHEST expense in the first year of a vehicle's life?

Accepted Answer

Double-declining balance depreciation

Answer

Double-declining balance applies twice the straight-line rate to the book value, front-loading depreciation expense more than other methods.

Question 3

A favorable budget variance in fleet maintenance most likely indicates:

Accepted Answer

Actual maintenance costs were lower than budgeted

Answer

A favorable variance means actual spending came in below the budgeted amount, though it should be investigated to confirm it reflects genuine savings, not deferred maintenance.

Question 4

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

Accepted Answer

To allocate fleet costs to the departments that use the vehicles

Answer

Charge-back systems assign vehicle-related costs to the consuming business units, promoting accountability and more accurate departmental cost reporting.

Question 5

Which factor most directly increases a fleet vehicle's residual value at the end of its lifecycle?

Accepted Answer

Consistent preventive maintenance records

Answer

Complete and consistent maintenance records demonstrate vehicle health to buyers, commanding higher resale prices at disposal.

CAFM - Certified Automotive Fleet Manager Practice Test

CAFM - Certified Automotive Fleet Manager Practice Test

CAFM Financial Management & Budgeting 3