CAM Financial Management & Budgeting 3

Question 1

A rolling 12-month budget is reforecast every quarter. What is the main advantage of this approach over a static annual budget?

Accepted Answer

It always maintains a forward-looking planning horizon as months are added

Answer

Rolling budgets continuously extend the planning horizon, keeping forecasts current and relevant.

Question 2

In account management, 'cost of goods sold' (COGS) is subtracted from revenue to arrive at:

Accepted Answer

Gross profit

Answer

Gross profit = Revenue − COGS, representing profit before operating expenses are deducted.

Question 3

A client's budget shows fixed costs of $200,000 and variable costs of $15 per unit. At 10,000 units, what is the total budget?

Accepted Answer

$350,000

Answer

Total cost = Fixed ($200,000) + Variable ($15 × 10,000 = $150,000) = $350,000.

Question 4

Which scenario best illustrates a 'favorable' budget variance?

Accepted Answer

Actual expenses are $8,000 below budget

Answer

A favorable variance occurs when actual expenses are lower than budgeted, improving the financial position.

Question 5

An account manager is building a business case for a new tool. The tool costs $30,000 and saves $12,000 per year. What is the payback period?

Accepted Answer

2.5 years

Answer

Payback period = Initial investment / Annual savings = $30,000 / $12,000 = 2.5 years.

(CAM) Certified Account Manager Practice Test