AACE CCT Primer Test Questions and 100%
Correct Verified Answers
The owner approaches cost from a _____ point of view. Owners not only consider the
cost of the construction, or process, but ______ supervision
and overhead, implementation costs, cost of money, furniture, fixtures, equipment( FFE)
and other considerations - Answer holistic, internal
Contractors, subcontractors, suppliers only consider their part of the _______ and are
responsible for that alone. - Answer Project costs
Appraising or estimating the worth of something having economic or monetary value is
the general description of ________. - Answer valuation
Valuation in _______ is the determination of the worth of the asset or that which has
been damaged or lost - Answer insurance, insured
Valuation in ________ is the determination of the dutiable value of imports by the
customs authorities. - Answer International Trade
A(n) _________ represents the foregone benefit by choosing one alternative over
another - Answer Opportunity cost
There is a relationship between time and the opportunity to influence a projects cost.
The more time that has elapsed, the ____ the chance to alter the cost. It is important to
make the cost effective decisions ______ in a project or process to have the most
influence on cost. - Answer less, early
________focuses on external reporting. Maintain the balance sheet (assets and
liabilities) and generate income (revenues less expenses) and tax statements for the
,organization _________. Only look at indirects costs as a whole, not broken out to
individual products or departments. - Answer Managerial Accounting, as a whole
In cost accounting the focus is on ___________, and their product is often proprietary.
Determine how much it is costing the organization to produce a particular product.
Looks at appropriate allocation of overhead and indirect costs to only include those
______ to the product. - Answer internal reporting, directly applicable
Impact of "One Size Fits All" Allocation - Answer Easy to come up with and ensure 100%
allocation of the overhead costs, usually don't reflect what is truly needed to produce
that organizational deliverable. In the "one size fits all" approach, overhead and indirect
costs and forced DOWN onto the product.
Activity Based Costing - Answer A production process is broken down into ACTIVITIES.
Typical nomenclature is an "action verb-adjective-noun" grammar convention(inspect
defective products, open new customer accounts).
Operating Costs - Answer Expenses incurred during the normal operation of a facility
including labor, materials, utilities, and other related costs. Examples: fuel, lubricants,
scheduled part changes, building maintenance, cleaning services, taxes
Manufacturing Costs - Answer Variable & fixed, direct & indirect costs chargeable to the
production of a given product, usually expressed in cents or dollars per unit of
production, or dollars per year
Maintenance Costs - Answer Labor, material, & other related costs incurred in
conducting corrective and preventative maintenance and repair on a facility
Fixed Capital - Answer Includes plant equipment, building, furniture and fixtures,and
transportation equipment used directly in the production of a product or service
,Depreciation - Answer Form of capital recovery for property with a life span of more
than 1 year; a portion of the asset's value is periodically charged to current operations.
Decreases book value on the balance sheet, added depreciation expense to income
statement. Managerial rather than cost accounting concern.
Amortization - Answer form of capital recovery for property with indefinite life;
distribution of the initial cost by periodic charges to operations as in depreciation
Accrual - Answer Accounting method that records revenues and expenses when they
are incurred, regardless of when cash is exchanged
Expense - Answer Expenditures of short-term value, including depreciation, as opposed
to land and other fixed capital
Fixed Cost - Answer Costs that must be provided independent of short term variations
volume of work activity. These can be either direct or indirect costs
Variable Cost - Answer costs that are a function of production, e.g., raw materials
costs, by-product credits, and those processing costs that vary with plant output (such
as raw materials, utilities, catalysts and chemical, packaging, and labor for batch
operations)
Unit Cost - Answer = [(fixed costs) + (qty * variable cost)] / (qty)
Incremental (or marginal) Cost - Answer How much the total cost increases if you
increase production by one more unit. As the fixed costs have been recouped in the
original production run pricing, the incremental cost is usually just the variable cost.
, Order-specific costing technique - Answer used in situations where each job is different
and is performed to the customer's specifications. Job costing involves keeping an
account of direct costs (labor, machine time, raw materials) and indirect costs
(overheads)
Material Types - Answer Raw, Bulk, Fabricated, Engineered, Consumables
Materials - Raw - Answer Raw materials are those materials used in a production or
fabrication process that require a minimum amount of processing to be useful [S&K 5th
Ed., 3.2].
Materials - Bulk - Answer Material bought in lots. These items can be purchased from a
standard catalog description and are bought in quantity for distribution as required.
Examples are pipe, conduit, fittings and wire [RP 10S-90].
Materials - Fabricated - Answer Fabricated materials are bulk materials transformed into
custom-fit items for a particular product or project [S&K 5th Ed., 3.3].
Materials - Engineered or Designed - Answer Engineered or designed materials
constitute a category requiring substantial working in order to attain their final form.
Design or engineered materials are also based on shop drawings [S&K 5th Ed., 3.3].
Materials - Consumables - Answer Supplies and materials used up during construction.
Includes utilities, fuels and lubricants, welding supplies, worker's supplies, medical
supplies, etc.
Items that can affect purchase cost of materials - Answer a. market pricing (pre-
negotiated vs. competitively bid, etc.)
b. order quantity
