FMP - Facility Management Professional Facility Financial Management Questions and Answers

Question 1

A facility manager is preparing the annual budget and needs to justify every expense from scratch, without reference to previous budgets.
This approach is intended to eliminate outdated or inefficient spending.
Which budgeting method is being used?

Accepted Answer

Zero-Based Budgeting

Answer

Incremental Budgeting

Answer

Activity-Based Budgeting

Answer

Flexible Budgeting

Question 2

When evaluating two different HVAC systems for a new building, a facility manager calculates the total cost of each system over its entire lifespan, including acquisition, installation, energy consumption, maintenance, and disposal. What is this financial analysis method called?

Accepted Answer

Life Cycle Cost Analysis (LCCA)

Answer

Return on Investment (ROI) Analysis

Answer

Total Cost of Ownership (TCO)

Answer

Payback Period Calculation

Question 3

A facility manager implements a system to track the utility consumption of each department and provides them with detailed reports showing their associated costs. However, the departments are not financially billed for their usage; the costs remain within the facility's central budget. What is this cost allocation practice known as?

Accepted Answer

Showback

Answer

Cost Centering

Answer

Chargeback

Answer

Activity-Based Costing

Question 4

At the end of the second quarter, a facility manager compares the actual maintenance expenditures of $150,000 against the budgeted amount of $120,000. This process of comparing actual financial results to the budget is known as:

Accepted Answer

Variance Analysis

Answer

Financial Forecasting

Answer

Auditing

Answer

Asset Valuation

Question 5

Which of the following financial reports provides a snapshot of the facility department's assets, liabilities, and equity at a single point in time?

Accepted Answer

Balance Sheet

Answer

Profit and Loss (P&L) Statement

Answer

Cash Flow Statement

Answer

Job Costing Report

Question 6

A facility manager is reviewing the budget and notes that utility costs are a significant, recurring expense that must be paid regularly, though the exact amount may fluctuate slightly. In a facility budget, how would this type of expense be categorized?

Accepted Answer

Fixed Cost

Answer

Capital Expense

Answer

Variable Cost

Answer

Discretionary Cost