Cost Estimation Questions and Answers

Answer: C

The percentage is the proportion the unit time falls to, not the proportion by which it falls, so a ninety per cent curve improves more slowly than an eighty per cent one. Both halves of the statement are therefore wrong.

Answer: D

Running and maintenance costs over twenty years commonly exceed the purchase price several times over, so the cheapest machine to buy is often the dearest to own. Disposal cost is part of the life cycle figure rather than excluded from it.

Answer: A

Correct answer: direct expenses traceable to the job

Prime cost admits only what can be traced directly to the job, and a direct expense qualifies. Rent, administration salaries and sales commission are all apportioned rather than traced, and each belongs to a different overhead layer of the build-up - factory, administration and selling respectively.