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.

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  1. A software manager must defend the project budget to senior leadership. Which document BEST demonstrates the financial health of the project at a given point in time using earned value data?

    Answer: Project Performance Report with CPI and SPI

    A performance report combining CPI (cost efficiency) and SPI (schedule efficiency) from earned value data provides leadership with a quantified view of project financial health.

  2. When a software project's Estimate at Completion (EAC) is calculated as BAC ÷ CPI, it assumes that:

    Answer: Current cost performance will continue for the remainder of the project

    EAC = BAC ÷ CPI assumes the current cost performance index is a reliable predictor of future performance throughout the rest of the project.

  3. A software organization's budget shows $800,000 in fixed costs and a contribution margin of 40% per unit sold. What annual revenue is needed to break even?

    Answer: $2,000,000

    Break-even revenue = Fixed costs ÷ Contribution margin ratio = $800,000 ÷ 0.40 = $2,000,000.

  4. Which of the following BEST describes the purpose of a software project's cost baseline?

    Answer: To provide a time-phased budget used to measure and monitor cost performance

    The cost baseline is a time-phased budget (often shown as an S-curve) used as the reference point for measuring cost variance throughout project execution.

  5. A software manager receives a change request that increases scope. After approval, the cost baseline is updated. What is this updated baseline called?

    Answer: Re-baselined Performance Measurement Baseline

    When approved scope changes alter the cost baseline, the updated baseline is called the re-baselined (or revised) Performance Measurement Baseline, reflecting the new authorized budget.

  6. Opportunity cost in software investment decisions refers to:

    Answer: The value of the next-best alternative foregone when choosing one investment

    Opportunity cost is the benefit sacrificed by committing resources to one project instead of the next-best alternative use of those same resources.

  7. A software manager uses parametric estimating to forecast costs. This method is MOST reliable when:

    Answer: Historical data is plentiful and the relationship between parameters and cost is proven

    Parametric estimating applies statistical relationships between historical data and project parameters (e.g., function points, lines of code), producing reliable estimates when those relationships are well-validated.