Project Costing

What is the main objective of a feasibility study?

• To determine the approximate cost of a project during its preliminary phase

• To estimate the cost with the estimator

• To recognize the objective of a feasibility study

• To examine the analysis of the feasibility study

Which cost category is continually incurred as long as the business is in operation?

• Investment or capital costs

• Operating costs

• Capital costs

• Auxiliary costs

What is the purpose of Parametric estimating in cost estimation methodologies?

• To utilize validated relationships between a project's known technical cost characteristics and historical resources consumed

• To estimate the cost with the estimator

• To determine the approximate cost of a project during its preliminary phase

• To find similarities with projects or major project components

What is the Ratio Factor in cost estimation methodologies?

• A linear relationship between the cost and duration of the project and one or more of the project attributes

• A technique that utilizes validated relationships between a project's known technical cost characteristics and historical resources consumed

• A method to estimate other project costs

• A method to estimate the cost of a piece of equipment for a new project

What is the importance of accuracy in cost estimation?

• Prepare a comprehensive checklist of all required project equipment

• Lead estimators must know the project details

• Source price quotations from reliable suppliers of equipment and building contractors

• Apply the appropriate contingency and escalation allowances for equipment and construction cost estimates

What is the purpose of Initial working capital in project costing?

• To evaluate the analysis of the feasibility study

• To estimate the cost with the estimator

• To fund the normal day-to-day operations of the business

• To determine the approximate cost of a project during its preliminary phase

What is the difference between Financing Leases and Operating Leases?

• Financing Leases involve short-term financial commitments, while Operating Leases involve long-term commitments

• Operating Leases involve a higher total periodic payment compared to Financing Leases

• Financing Leases involve a higher total periodic payment compared to Operating Leases

• Financing Leases involve long-term commitments, while Operating Leases involve short-term financial commitments

What is the purpose of a Schedule of total investment cost in project costing?

• To determine the approximate cost of a project during its preliminary phase

• To decide whether the project should continue to the next stage of investigation

• To calculate the difference between the total investment cost and the amount of equity

• To provide a breakdown of all the costs involved in the project

What are Fixed Costs in operating cost estimation?

• Costs that do not vary with the quantity of units produced

• Costs that will change in some proportion with the level of activity

• Costs that are necessary to the manufacturing process

• Costs that directly relate to the manufacturing of a product

What is the purpose of Depreciation and amortization in operating cost estimation?

• To estimate the cost with the estimator

• To determine the amount of equity required for funding

• To calculate the total investment cost of the project

• To spread the cost of using the asset over its lifetime