CCT Cost Estimation & Budgeting 3

Question 1

In a three-point estimate, if the optimistic estimate is $80,000, pessimistic is $140,000, and most likely is $100,000, what is the PERT weighted average?

Accepted Answer

$101,667

Answer

PERT = (O + 4M + P) / 6 = ($80,000 + 4×$100,000 + $140,000) / 6 = $610,000 / 6 = $101,667.

Question 2

Which type of cost is directly traceable to a specific cost object such as a product or project?

Accepted Answer

Direct cost

Answer

Direct costs are those that can be specifically identified with and traced to a particular cost object without allocation.

Question 3

What does the term 'cost normalization' refer to in cost estimating?

Accepted Answer

Adjusting historical costs to a common time period using indices

Answer

Cost normalization adjusts historical cost data to a common base year using escalation indices to enable valid comparisons.

Question 4

A project budget shows $300,000 for materials, $150,000 for labor, and $50,000 for equipment. If overhead is applied at 25% of direct labor, what is the total project budget?

Accepted Answer

$537,500

Answer

Overhead = 25% × $150,000 = $37,500; Total = $300,000 + $150,000 + $50,000 + $37,500 = $537,500.

Question 5

Which scheduling technique creates a time-phased budget by spreading cost estimates across the project schedule?

Accepted Answer

Cost loading

Answer

Cost loading distributes estimated costs across the project schedule to create a time-phased expenditure plan.

(CCT) Certified Cost Technician Practice Test

(CCT) Certified Cost Technician Practice Test

CCT Cost Estimation & Budgeting 3