CVE Financial Management & Budgeting 5

Question 1

A venue's actual food costs for Q3 were $78,000 against a budget of $65,000. How should the CVE classify this variance?

Accepted Answer

Unfavorable cost variance

Answer

When actual costs exceed the budget, it is an unfavorable variance because the venue spent more than planned.

Question 2

Which depreciation method allocates a larger expense in earlier years of an asset's useful life, reducing taxable income faster?

Accepted Answer

Double declining balance depreciation

Answer

Double declining balance applies twice the straight-line rate to the remaining book value, front-loading depreciation expense.

Question 3

A venue executive reviews its RevPAF (Revenue Per Available Function space). This KPI is calculated as:

Accepted Answer

Total revenue ÷ total available function space square footage × time period

Answer

RevPAF measures how effectively a venue monetizes its available function space per unit of time and area.

Question 4

When a venue receives a government grant for accessibility renovations, how is it typically recognized under GAAP?

Accepted Answer

Deferred and recognized as the related expenses are incurred

Answer

Under GAAP, government grants related to assets or expenses are recognized in income over the periods in which the related costs are incurred.

Question 5

A venue manager uses sensitivity analysis in budgeting. What is the primary purpose of this technique?

Accepted Answer

To assess how changes in key assumptions affect financial outcomes

Answer

Sensitivity analysis tests how variations in assumptions like attendance or pricing affect profitability, helping managers plan for uncertainty.

(CVE) Certified Venue Executive Practice Test