CAFM Fleet Financial Management 2

Question 1

A fleet manager is evaluating whether to replace a vehicle at 80,000 miles or hold it to 120,000 miles. Which financial concept best guides this decision?

Accepted Answer

Optimum replacement point

Answer

The optimum replacement point is the mileage or age at which the total cost of ownership (including maintenance escalation) is minimized, guiding replacement timing.

Question 2

Which metric measures how efficiently a fleet operation converts revenue into profit by tracking costs as a percentage of income?

Accepted Answer

Operating ratio

Answer

The operating ratio (operating expenses ÷ operating revenue × 100) measures operational efficiency; a lower ratio indicates better profitability.

Question 3

A fleet's vehicle costs $45,000 new and has a projected residual value of $9,000 after 5 years. What is the straight-line annual depreciation?

Accepted Answer

$7,200

Answer

Straight-line depreciation = (Cost − Residual) ÷ Years = ($45,000 − $9,000) ÷ 5 = $7,200 per year.

Question 4

When comparing a lease versus purchase decision, which cost is unique to a purchase arrangement that does not appear in a lease payment?

Accepted Answer

Opportunity cost of capital

Answer

Purchasing ties up capital, creating an opportunity cost (the return that capital could have earned elsewhere) that is absent in a lease structure.

Question 5

A fleet manager implements a chargeback system that bills each department for its vehicle usage. The primary benefit of this approach is:

Accepted Answer

Improving cost visibility and accountability by department

Answer

Chargeback systems allocate fleet costs to the departments that incur them, creating transparency and incentivizing responsible vehicle use.

CAFM - Certified Automotive Fleet Manager Practice Test

CAFM - Certified Automotive Fleet Manager Practice Test

CAFM Fleet Financial Management 2