Practice Test Geeks(CSM) Certified Software Manager Practice Test
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Financial Management & Budgeting Flashcards

7 cards from real CSM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Financial Management & Budgeting flashcards as text

  1. A software manager uses bottom-up estimating to build a project budget. What is the PRIMARY advantage of this approach over top-down estimating?

    Answer: It provides greater accuracy by aggregating detailed work package costs

    Bottom-up estimating aggregates costs from individual work packages, producing more accurate budgets than top-down approaches that rely on analogies or executive targets.

  2. Which financial metric measures how much revenue a software product must generate before the project investment is recovered?

    Answer: Break-even point

    The break-even point is the revenue level at which total income equals total costs, meaning the initial investment has been fully recovered.

  3. A CSM candidate is analyzing a software project with a Cost Performance Index (CPI) of 0.82. What does this indicate?

    Answer: The project is receiving $0.82 in value for every $1.00 spent

    A CPI below 1.0 means the project is over budget; a CPI of 0.82 means only $0.82 of planned value is being earned per dollar spent.

  4. When a software organization allocates shared infrastructure costs across multiple projects based on each project's usage percentage, this is called:

    Answer: Cost pooling and allocation

    Cost pooling collects indirect costs into a pool, then allocates them to cost objects (projects) based on a rational allocation base such as usage percentage.

  5. A software manager must choose between leasing servers at $5,000/month or purchasing them for $120,000 upfront. At what month does the purchase option break even with leasing?

    Answer: 24 months

    $120,000 ÷ $5,000/month = 24 months, so the purchase investment is recovered after two years of equivalent lease payments.

  6. In earned value management, the Budget at Completion (BAC) represents:

    Answer: The total authorized budget for the entire project

    BAC is the total approved budget assigned to the project scope and serves as the baseline against which performance is measured.

  7. A software budget shows a favorable variance of $30,000 in the current period. How should the manager BEST interpret this?

    Answer: Actual costs were $30,000 less than planned costs for the period

    A favorable cost variance means actual spending came in below the budgeted amount for that period, though it does not guarantee the entire project will finish under budget.