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

Life-cycle cost analysis evaluates all costs associated with an asset from acquisition through disposal, enabling fair comparison between alternatives.

Question 2

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

Accepted Answer

Overrun

Answer

A budget overrun occurs when actual spending exceeds the authorized appropriation, which may require a budget amendment or supplemental appropriation.

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

The Davis-Bacon Act requires contractors on federally funded construction projects to pay workers the locally prevailing wage rates for their job classifications.

Question 4

An encumbrance in governmental budgeting represents:

Accepted Answer

A commitment of funds for a future obligation not yet paid

Answer

An encumbrance reserves budget authority when a purchase order or contract is issued, before the actual expenditure is recorded.

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

Activity-based costing allocates overhead by identifying the activities that drive costs and assigning those costs based on actual resource consumption.

(CPWM) Certified Public Works Manager Practice Test

(CPWM) Certified Public Works Manager Practice Test

CPWM Budget and Finance 3