CPWM Financial Planning & Budgeting 3

Question 1

Which type of cost remains constant regardless of the volume of service provided, such as a monthly lease on a facility?

Accepted Answer

Fixed cost

Answer

Variable cost

Answer

Marginal cost

Answer

Step cost

Question 2

A public works department applies for a federal formula grant. Unlike discretionary grants, formula grants are distributed based on:

Accepted Answer

Statutory criteria such as population or lane miles

Answer

Competitive scoring of submitted proposals

Answer

Direct negotiation with the federal program office

Answer

Demonstrated financial need determined annually

Question 3

Which cost allocation method distributes indirect costs to departments based on the proportion of a single measurable factor such as square footage or FTEs?

Accepted Answer

Single-rate allocation

Answer

Step-down allocation

Answer

Direct allocation

Answer

Activity-based costing

Question 4

A city's five-year capital improvement plan (CIP) projects a $2 million street resurfacing project in Year 3. The most important financial reason for including it in the CIP now is:

Accepted Answer

To allow time to secure funding and plan cash flow

Answer

To satisfy state reporting requirements immediately

Answer

To lock in current construction pricing

Answer

To transfer the budget appropriation this fiscal year

Question 5

When evaluating a lease-versus-purchase decision for a large piece of public works equipment, the analysis should include:

Accepted Answer

Total life-cycle costs, financing costs, and tax implications

Answer

Only the first-year cash outlay for each option

Answer

The vendor's preference and available inventory

Answer

The equipment's resale value only at the end of useful life

Question 6

Which fund type is used to account for resources legally restricted to paying principal and interest on long-term general obligation debt?

Accepted Answer

Debt service fund

Answer

Capital projects fund

Answer

Special revenue fund

Answer

Internal service fund

Question 7

A public works manager reviewing year-end financial statements notices that actual expenditures were 94% of appropriations. This variance most likely indicates:

Accepted Answer

Projects were completed under budget or delayed

Answer

A material internal control weakness

Answer

The department will receive a supplemental appropriation

Answer

An error in the fund balance calculation