CDT Cost Estimation & Budgeting 3 — Questions and Answers
Question 1: Which cost category includes expenses such as facility rent, insurance, and management salaries that do not vary with production output?
- Direct material costs
- Variable costs
- Fixed overhead costs (Correct answer)
- Marginal costs
Correct answer: Fixed overhead costs
Fixed overhead costs remain constant regardless of production volume and include expenses like rent, insurance, and management salaries.
Question 2: On a CDT exam project, a quantity takeoff shows 1,450 LF of 2×6 framing lumber. If the unit cost is $0.85/LF, what is the estimated material cost?
- $1,015.00
- $1,190.50
- $1,232.50 (Correct answer)
- $1,450.85
Correct answer: $1,232.50
1,450 LF × $0.85/LF = $1,232.50 is the total estimated material cost for the framing lumber.
Question 3: Which document formally establishes the approved total project budget and serves as the baseline for cost control?
- Work breakdown structure
- Cost baseline (Correct answer)
- Change order log
- Bid tabulation
Correct answer: Cost baseline
The cost baseline is the approved, time-phased project budget that serves as the reference point for measuring and controlling cost performance.
Question 4: When converting a schematic design estimate to a design development estimate, accuracy typically improves because:
- Contingencies are eliminated
- More project details and specifications are defined (Correct answer)
- Labor rates are locked in by contract
- Material costs decrease over time
Correct answer: More project details and specifications are defined
As design progresses and more details are defined, estimators can replace assumptions with actual quantities and specifications, improving accuracy.
Question 5: A drafter is tasked with creating a cost estimate for a custom weldment. Which drawing type provides the most complete information for material cost takeoff?
- Exploded assembly drawing
- Detail drawing with weld symbols and material callouts (Correct answer)
- Orthographic projection without dimensions
- Pictorial sketch
Correct answer: Detail drawing with weld symbols and material callouts
A detail drawing with weld symbols and material callouts specifies exact dimensions, material grades, and weld types needed for accurate fabrication cost estimation.
Question 6: What is 'value engineering' in the context of construction cost management?
- Adding premium features to increase building value
- A systematic review to achieve required functions at the lowest cost (Correct answer)
- Increasing the project contingency reserve
- Applying escalation factors to future costs
Correct answer: A systematic review to achieve required functions at the lowest cost
Value engineering is a systematic review process that identifies ways to achieve the required project functions while reducing unnecessary costs.
Question 7: In manufacturing cost estimation, 'burden rate' or 'overhead rate' is typically expressed as:
- A fixed dollar amount per project
- A percentage of direct labor costs (Correct answer)
- A percentage of total sales revenue
- A per-square-foot facility charge
Correct answer: A percentage of direct labor costs
The burden rate is most commonly expressed as a percentage of direct labor costs and is applied to allocate indirect manufacturing overhead to products.
CDT Cost Estimation & Budgeting 3
Which cost category includes expenses such as facility rent, insurance, and management salaries that do not vary with production output?