CPWM Budget and Finance 3

Question 1

A public works manager wants to compare the total cost of owning two different fleet vehicles over their useful lives. Which analysis technique is most appropriate?

Accepted Answer

Life-cycle cost analysis

Answer

Break-even analysis

Answer

Payback period analysis

Answer

Variance analysis

Question 2

When a public works department's actual expenditures exceed the adopted budget appropriation, this is called a budget:

Accepted Answer

Overrun

Answer

Encumbrance

Answer

Surplus

Answer

Carryforward

Question 3

Which federal law establishes prevailing wage requirements that affect labor costs on federally funded public works construction projects?

Accepted Answer

Davis-Bacon Act

Answer

Fair Labor Standards Act

Answer

Buy America Act

Answer

Service Contract Act

Question 4

An encumbrance in governmental budgeting represents:

Accepted Answer

A commitment of funds for a future obligation not yet paid

Answer

An actual expenditure already paid

Answer

An unappropriated fund balance

Answer

A revenue that has been collected but not yet spent

Question 5

Which cost allocation method distributes overhead costs to programs or services based on their relative use of a shared resource?

Accepted Answer

Activity-based costing

Answer

Direct cost method

Answer

Reciprocal method

Answer

Step-down method

Question 6

A public works department charges user fees for stormwater management services. To comply with the cost-of-service principle, fees should:

Accepted Answer

Cover no more than the costs reasonably attributable to providing the service

Answer

Exceed the full cost to generate surplus revenue

Answer

Be set below market rates to encourage usage

Answer

Be uniform regardless of the volume of service consumed

Question 7

What is the difference between a capital expenditure and an operating expenditure in public works budgeting?

Accepted Answer

Capital expenditures acquire or improve long-term assets; operating expenditures cover ongoing service delivery costs

Answer

Capital expenditures are funded by taxes; operating expenditures are funded by fees

Answer

Capital expenditures require federal approval; operating expenditures do not

Answer

Capital expenditures are one-time; operating expenditures are recurring grants