CVE Financial Management & Budgeting 2

Question 1

A venue's fixed costs are $45,000/month and variable costs are $12 per attendee. If a client books 500 attendees, what is the total cost?

Accepted Answer

$57,000

Answer

Total cost = $45,000 + (500 × $12) = $45,000 + $6,000 = $51,000... wait: $45,000 + $6,000 = $51,000; correct answer is $51,000.

Question 2

Which financial metric best measures how efficiently a venue converts revenue into profit after all operating expenses?

Accepted Answer

Net profit margin

Answer

Net profit margin accounts for all expenses including taxes and interest, making it the most comprehensive profitability measure.

Question 3

A venue charges $8,000 for a ballroom rental and incurs $2,400 in direct costs. What is the contribution margin ratio?

Accepted Answer

70%

Answer

Contribution margin = ($8,000 - $2,400) / $8,000 = $5,600 / $8,000 = 70%.

Question 4

When preparing an annual venue budget, which approach starts from zero and requires justification for every expense line?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting requires every expense to be justified from scratch each period, regardless of prior year spending.

Question 5

A venue's accounts receivable days outstanding increased from 25 to 45 days. What does this indicate?

Accepted Answer

Slower collection of revenue

Answer

Higher accounts receivable days means clients are taking longer to pay, which can strain the venue's cash flow.

(CVE) Certified Venue Executive Practice Test