APM PMQ Business Case and Investment Appraisal Questions and Answers (rated A)

APM PMQ Business Case and Investment Appraisal Questions and Answers (rated A) APM PMQ Business Case and Investment Appraisal Questions and Answers (rated A) What is a fixed cost? - ANSWER-A cost that remains the same over a given period of time irrespective of output/production changes e.g. rent, rates, step fixed costs. What is a variable cost? - ANSWER-Refers to a constant amount per unit of output/production e.g. changes in proportion to the volume of output; materials used in production. (May change depending on departmental viewpoint) What is a semi-variable cost? - ANSWER-Costs comprising both fixed and variable components e.g. phone tariff, photocopier. What are Direct Costs? - ANSWER-Costs that can be specifically identified with a particular project or activity. e.g. cost of materials and labour in a manufacturing environment, software rented solely for one project. What are indirect costs? - ANSWER-A cost which cannot be attributed to a particular unit of output. They are incurred by the business as a whole e.g. head office costs, marketing costs Overheads. What are discretionary costs? - ANSWER-Costs that organizations have discretion in deciding whether to fund them e.g. Advertising, training, research Do not change in line with production Fixed and often direct Can be increased or decreased as a result of 'management' decisions.