Certified Dietary Manager (CDM) Practice Exam

What is the primary focus of cost justification?

1. Maximizing revenue despite costs

2. Comparing costs with benefits

3. Finding the lowest price for supplies

4. Eliminating unnecessary expenses

The correct answer is: Comparing costs with benefits

The primary focus of cost justification is centered around comparing costs with benefits. This approach allows organizations to assess whether the expenses associated with a particular project, program, or initiative are justified by the benefits they will yield. It provides a systematic way to evaluate options and make informed decisions by weighing the expected gains against the expenditures involved. In practice, this means that rather than simply aiming to reduce costs or seek the lowest possible prices, cost justification requires a thorough analysis to ensure that any investments made will lead to valuable outcomes. This evaluation helps managers allocate resources effectively, ensuring the financial sustainability of their operations while still accomplishing their goals. By focusing on the relationship between costs and benefits, organizations can make strategic choices that ultimately enhance efficiency and effectiveness without compromising quality or service.