CAFM Fleet Financial Management 3

Question 1

A fleet manager notices that fixed costs remain constant regardless of fleet utilization. Which of the following is a fixed fleet cost?

Accepted Answer

Vehicle depreciation

Answer

Depreciation is a fixed cost because it accrues by time (or a set schedule) regardless of how many miles the vehicle is driven.

Question 2

In fleet financial analysis, what does the term 'lifecycle cost' encompass?

Accepted Answer

All costs from acquisition through disposal including fuel, maintenance, and financing

Answer

Lifecycle cost (total cost of ownership) includes every cost incurred from vehicle acquisition through final disposal, giving a complete financial picture.

Question 3

Which financial analysis method discounts future cash flows back to today's value to evaluate a fleet investment?

Accepted Answer

Net present value (NPV)

Answer

NPV discounts all future cash inflows and outflows to present value using a discount rate, allowing comparison of fleet investment alternatives.

Question 4

A fleet manager is preparing a zero-based budget. What distinguishes this from a traditional incremental budget?

Accepted Answer

Every expense must be justified from scratch regardless of prior year spending

Answer

Zero-based budgeting requires justification for all expenditures anew each cycle, eliminating automatic carryover of prior-year costs.

Question 5

When a fleet vehicle is sold at auction for more than its book value, the difference is classified as:

Accepted Answer

A gain on sale of asset

Answer

Proceeds exceeding book value at disposal create a gain on sale of asset, which may be subject to taxes including depreciation recapture.

CAFM - Certified Automotive Fleet Manager Practice Test

CAFM - Certified Automotive Fleet Manager Practice Test

CAFM Fleet Financial Management 3