Free CDFM Budget and Cost Analysis Questions and Answers

Question 1

What is the primary goal of the Program Budget Review (PBR) process in the Department of Defense?

Accepted Answer

To ensure alignment of budget proposals with strategic priorities

Answer

The Program Budget Review (PBR) process is a critical step in the Department of Defense's planning, programming, budgeting, and execution (PPBE) cycle. Its primary purpose is to review and adjust program budgets to ensure they are consistent with the strategic guidance and priorities established in the National Defense Strategy and other defense planning documents.

Question 2

Which of the following is a key component of the Life Cycle Cost (LCC) estimate in defense budgeting?

Accepted Answer

Development, procurement , operations, maintenance, and disposal costs.

Answer

A Life Cycle Cost (LCC) estimate provides a comprehensive view of the total cost of a system or program over its entire lifespan. It includes all costs from initial research and development through procurement, sustained operations and maintenance, and eventual disposal, offering a complete financial picture for decision-making.

Question 3

What is the primary purpose of conducting a sensitivity analysis in cost estimation?

Accepted Answer

To identify the most significant cost drivers and assess their impact on total cost

Answer

Sensitivity analysis in cost estimation helps identify which input variables have the greatest influence on the overall cost estimate. By varying these key parameters, analysts can understand the range of potential costs and pinpoint areas of high risk or uncertainty, allowing for better risk management and more robust cost planning.

Question 4

In the context of defense budgeting, what is a "funding wedge"?

Accepted Answer

An increase in funding required to sustain a program beyond the current budget

Answer

In defense budgeting, a 'funding wedge' typically refers to the additional resources needed to continue or expand a program in future fiscal years beyond what is currently allocated or projected. It represents the gap between current funding and the resources required to meet future program objectives or sustain capabilities.

Question 5

Which cost estimation technique involves comparing the cost of a new program to similar existing programs?

Accepted Answer

Analogous estimating

Answer

Analogous estimating is a top-down cost estimation technique that uses the actual cost of a previous, similar project or program as a basis for estimating the cost of a new one. It relies on historical data from comparable projects, adjusting for differences in size, complexity, and other relevant factors.

CDFM - Certified Defense Financial Manager Practice Test

CDFM - Certified Defense Financial Manager Practice Test

Free CDFM Budget and Cost Analysis Questions and Answers