Budget Management & Financial Planning Flashcards
7 cards from real CMP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Budget Management & Financial Planning flashcards as text
Which registration pricing strategy is MOST effective for encouraging early commitment and improving cash flow?
Answer: Implementing tiered early-bird pricing with deadlines that progressively increase the fee
Tiered early-bird pricing incentivizes early registration, improving cash flow and providing more accurate attendance projections.
A planner is creating a zero-based budget for a new annual conference. What does this approach require?
Answer: Justifying every expense from zero regardless of whether it appeared in previous budgets
Zero-based budgeting requires each expense to be justified anew, preventing automatic carryover of outdated or unnecessary costs.
Which statement BEST describes the purpose of a food and beverage minimum in a hotel contract?
Answer: It establishes the minimum revenue the hotel expects from catering, which the client is liable for even if not fully consumed
An F&B minimum is a guaranteed revenue floor for the hotel; the client owes the minimum regardless of actual consumption.
A meeting generates $120,000 in registration revenue and incurs $95,000 in direct costs and $15,000 in overhead allocation. What is the event's contribution margin?
Answer: $25,000
Contribution margin equals revenue minus direct costs: $120,000 − $95,000 = $25,000 (overhead is subtracted to get net profit, not contribution margin).
When should a CMP MOST appropriately release funds held in the contingency reserve?
Answer: Only when a specific, identified risk event occurs that requires unplanned expenditure
Contingency funds should be released only when an actual unforeseen cost arises, preserving the reserve for genuine emergencies.
Which document formally authorizes a vendor to proceed with services and commits organizational funds before an invoice is issued?
Answer: A purchase order
A purchase order is the official document that authorizes a vendor to provide goods or services and creates a financial commitment.
A planner's event has a break-even attendance of 300 delegates. If 250 register, what is the MOST accurate financial characterization?
Answer: The event will operate at a loss because fixed costs exceed revenue at this attendance level
Below break-even attendance, fixed costs are not fully covered, resulting in a net loss for the event.