Analyzing Contract Costs Exam
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contains 55 Questions
1) Which of the following types of costs might be found both as direct costs and indirect costs, depending on the circumstance? [Recognize concerns that affect the other direct costs proposed]
2) Which of these statements below is correct regarding the criteria for classifying a special test equipment cost as an "other direct cost”? [Determine if the other direct costs are properly proposed]
3) Which of the following is an indirect cost pool? [Identify indirect cost pools and bases]
4) What two costs elements are required to calculate an indirect cost rate? [Identify the process of calculating indirect cost rates]
5) Which of the following is a phase in the allocation cycle? [Identify the cost allocation cycle]
6) How is simple linear regression used? [Identify what regression analysis is] [Remediation Accessed
7) Which regression method assumes a linear relationship between the dependent and independent variables? [Identify the different regression analysis methods]
8) Identify the situation where you would use simple linear regression. [Identify contract pricing situations where simple regression analysis should be considered]
9) After completing the five-step Least-Best-Squares-Fit (LBSF) process in developing a regression equation, you must evaluate which two aspects of the equation? [Identify the steps for using simple
regression analysis] [Remediation Accessed :N]
10) Which situation below would you use improvement curve analysis to evaluate proposed costs?
[Identify situations where improvement curve analysis would be appropriate]
11) What is the first step in conducting improvement curve analysis? [Identify the steps for using improvement curve analysis]
Collect the historical data Calculate the rate of improvement Calculate the slope of the curve
Determine the Theoretical value of unit #1
12) Given the improvement curve data, calculate the cost objective for unit #8. Labor hours for unit #4: 120 hours
Labor hours for unit #1: 160 hours
Rate of improvement: 10% Improvement curve slope: 90%
[Calculate an objective using improvement curve analysis]
108
12
16
144
13) How is the Treasury Rate applied in calculating Facilities Capital Cost of Money (FCCOM)?
[Recognize elements affecting facilities capital cost of money] [Remediation Accessed :N]
Divided into the FCCOM total amount
Treasury rate is not used in calculating FCCOM Multiplied by the FCCOM total amount
Divided by the Weighted Guidelines profit objective
14) Which of the following statements is true concerning profit/fee calculations? [Identify the factors affecting profit/fee analysis]
Profit/fee objectives are a product of risk
Profit/fee is calculated differently depending on DPAS rating of the contract Profit/fee objectives are reduced by the cost efficiency factor
Profit/Fee is calculated once for the basic contract and must not be recalculated on subsequent modifications
15) When is the working capital adjustment used while calculating profit/fee? [Calculate a profit/fee using the appropriate structured approach]
On all fixed price contracts with progress payments On all fixed price contracts
On all fixed price contracts with financing
On all fixed price contracts with performance based payments
16) What is the “base” that used in the calculation of the performance risk, contract type risk, and cost efficiency factor when using the weighted guidelines to determine a profit/fee objective? [– Develop a pre- negotiation position for profit or fee that is fair and reasonable.]
Total costs
Subtotal of costs Total price
Direct and Indirect costs
17) Which of the following factors is critical to a successful negotiation? [Identify factors that contribute to success in any negotiation]
Effectively prepare, plan, and communicate
Avoid being too friendly, in case the negotiations get difficult
Set your opening position extremely low to give room to negotiate The negotiation should be competitive
18) What is the negotiation term that reflects each party emphasizing the long term effects and benefits as well as both parties defining their interests to be achieved in conjunction with the outcome? [Identify key terms involved during a contract negotiation]
Win-Win Win-Lose Lose-Lose
Win-Lose-Win
19) What is an important driver to a successful negotiation? [Identify the importance of understanding cost drivers to ensure a successful outcome]
Listen to understand
Ensure your position is heard Maintain position of power
Obtain the lowest price for the government
20) Which of the following is the best strategy to mitigate cost risk? [Identify strategies to mitigate cost risk]
Conduct adequate market research prior to entering negotiations
Rely on the contractor’s proposed costs, supported by anecdotal data provided by the contractor Evaluate other contract actions awarded to the contractor you’re negotiating with
Establish a firm profit/fee percentage prior to entering negotiations
21) Each Price Negotiation Memorandum must contain which of the following? [Identify the key characteristics of a price negotiation memorandum]
Statement that the price is fair and reasonable Statement that the FAR was consistently followed Signature of the Contract Specialist
Signature of the Legal Counsel
22) Identify the circumstances when cost analysis should be performed by answering the following question. “Unless an exception to certified cost or pricing data applies, you can perform cost analysis on which of the following procurements?” [Identify cost analysis terms and techniques used when developing a pre-negotiation position]
All of these are correct
The award of any negotiated contract (except for undefinitized actions such as letter contracts
The award of a subcontract at any tier, if the contractor and each higher-tier subcontractor have been required to furnish certified cost or pricing data
The modification of any sealed bid or negotiated contract
23) Identify the response below that correctly describes the term “Data other than certified cost or pricing data.” [Identify terms associated with the Truth-in-Negotiations Act (TINA)]
Pricing data, cost data, and judgmental information that is not certified, but is used to determine a fair and reasonable price
All facts that prudent buyers and sellers would reasonably expect to affect price negotiations significantly and are factual, not judgmental, and are verifiable through certification
Pricing data and cost data that demonstrate an imbalance in unit pricing even though the overall proposed price appears to be fair and reasonable
Pricing data, cost data, and judgmental information that is not certified and therefore cannot be relied upon to determine a fair and reasonable price
24) Which of the following is an exception to the requirement to provide certified cost or pricing data?
[Determine if an exception to the Truth-in-Negotiations Act applies]
Adequate price competition
Repetitive buy of same or similar item where certified cost or pricing data had been provided in past When the contracting officer determines the prices agreed upon are based on identical forecasting
methods utilized in the Independent Government Estimate (IGE)
Proposal is less than $7.5 M
25) When the Contracting Officer has relied on certified cost or pricing data in the price determination, which of the following statements is true? [Identify the remedy to the Government in the event that a contractor submits defective data]
They must certify that they relied on that certified cost or pricing data in the Price Negotiation Memorandum
They must have had legal counsel review the cost or pricing data prior to negotiations
They are not required to certify that they relied on that cost or pricing data in the Price Negotiation Memorandum
They acknowledge their reliance on that cost or pricing data by signing the Price Negotiation Memorandum
26) Who has the authority to waive CAS applicability for a particular contract? [Identify the exemptions to Cost Accounting Standards (CAS) coverage]
The Agency Head
A level above the contracting officer
The Contracting Officer's Representative The Cognizant Federal Agency Official
27) When a contract is subject to CAS, the Contracting Officer: [Determine the level of CAS coverage that applies]
May not award a contract until a written adequacy determination has been made by the Cognizant
Federal Agency Official
May not award a contract until the cognizant Program Office official has conducted a review of the disclosure statement for adequacy and compliance
May not award a contract until a written adequacy determination has been made by the Cognizant Federal Agency Official unless approved as mission critical at least one level above the contracting officer
Is responsible only for ensuring the appropriate provisions are included in the solicitation. All other responsibilities for CAS are conducted by the ACO
28) What is the definition of a Disclosure Statement? [Identify the purpose of a Disclosure Statement]
Written description of a contractor’s cost accounting practices and procedures
A statement submitted by the contractor identifying the basis of estimate for each individual cost element contained in their proposal
Confidential document identifying all potential conflicts of interest that may arise as a result of a particular contract award
Certified record of all internal contractor rates and factors
29) A cost is allowable if it is: [Determine if a cost is allowable] Reasonable, allocable and compliant with CAS/GAAP Established, disclosed and allocated
According to the terms and conditions of the contract, compliant with CAS/GAAP and certified to be accurate, current and complete
Consistent, uniform, and reasonable
30) A contractor incurs costs for raw materials to be used in two different government contracts. Is the total value of this raw material allocable to one contract? [Determine if a cost is allocable]
No, material must be used and charged specifically to the benefiting contract Yes, because all the material is to be used for government contracts
Yes, due to the efficiency gained by procuring all the material at one time No, raw material is always charged as an overhead expense
31) Which of the following is the best method for determining if a proposed cost is reasonable?
[Determine if a cost is reasonable]
Comparing with other competitive proposals received in response to the solicitation Performing a quantitative analysis of the proposed cost using multivariate regression Evaluating the conditions surrounding the procurement. In cases of National Emergency or
Contingency, any cost within 50% of the IGE is considered reasonable
Ensuring the proposed cost is no more than 25% greater than the last known procurement of the item
32) When is it most appropriate to document or model a contractor’s proposal? [Identify the rationale for modeling a contractor’s cost proposal]
When the value, importance, and complexity warrant When analyzing multiple commercial supply proposals Anytime you award a competitive contract
Whenever there are values in excess of $1M included in the proposal
33) When is it most appropriate to document or model a contractor’s proposal? [Identify the required cost elements in FAR Table 15-2]
When the value, importance, and complexity warrant When analyzing multiple commercial supply proposals Anytime you award a competitive contract
Whenever there are values in excess of $1M included in the proposal
34) The two cost accounting systems that are used by a contractor manufacturing a number of specifically identifiable physical units and whose costs are normally accumulated under separate orders is: [Identify the two commonly used systems for cost accounting]
Process Cost System Job Order Accounting
Cost Accounting Standards
Generally Accepted Accounting Practice
35) The purpose of an audit is to: [Identify situations when an audit should be requested]
All of these are correct
Determine if the data is accurate and complete
Determine the degree of compliance with established procedures Verify transaction legality
36) How may you request an audit? [Identify the process for requesting an audit and the key players involved with the process]
All of these are correct By telephone call
By mail By e-mail
37) Select the item below that would be categorized as an Indirect Material cost. [Identify the different types of material costs]
Washers and seals used in the assembly process for all products Marketing costs for the sale of a particular item
The purchase of 104 motor assemblies needed to manufacture a product Frames that are fabricated for each individual unit
38) Which of the following is an example of a cost estimating technique that would be used when producing a summary cost estimate? [Determine the fairness and reasonableness of summary level cost estimates]
Cost Estimating Relationship (CER) Stratified sampling
Bill of Materials analysis
Vendor Quotes comparison
39) Identify when cost analysis is required. [Identify the fundamentals of cost analysis] [Remediation Accessed :N]
To evaluate the reasonableness of individual cost elements when certified cost or pricing data are required
Whenever a cost proposal is received
To evaluate each individual proposal cost element including FCCOM and profit or fee On all proposals exceeding the Simplified Acquisition Threshold
40) Identify the correct definition of “Cost Analysis.”. [Distinguish between cost analysis, price analysis, and cost realism analysis]
The review and evaluation of individual cost elements and proposed profit/fee in an offeror’s proposal Factual, not judgmental, and verifiable details of a cost proposal
Independent review of vendor quotes, long term agreements, and overhead costs in a proposal Analysis of “should cost” estimates compared to proposed costs
41) Which of the following is known as a “Questioned Cost”? [Identify the various types of audits]
[Remediation Accessed :N]
Costs on which audit action has been completed and which are not considered as acceptable as a contract cost
Costs which the auditor cannot evaluate as allowable or unallowable, because there is not enough information for analysis
Costs that have not yet been evaluated
Arithmetic difference between the amount proposed and the sum of the related questioned, unsupported, and unresolved amounts
42) Which sampling technique is used to focus on high-value items? [Determine the appropriateness of the offeror's cost estimating methodology]
Stratified Random Cluster Nonprobability
43) Which of the following is an effective use of stratified sampling? [Establish the fairness and reasonableness of detailed quantity estimates]
Analyzing the items that make up 80% of the total material cost and 10% of the remaining items Analyzing 20% of the items that are under $25,000
Analyzing 100% of the items
Analyzing 10% of the items selected randomly
44) When material prices may vary significantly from current inventory values, which estimating method should be used? [Evaluate the reasonableness of unit cost estimates]
Current Quotes Historical Quotes
Inventory Pricing
Long Term Agreement Pricing
45) You are preparing to negotiate a service task for routine maintenance of Government equipment. A sample of 25 records for similar maintenance tasks indicates that the average time required to perform similar maintenance tasks has been six hours and 40 minutes. How can you use this [Identify contract situations where statistical analysis is an appropriate tool for developing a pre-negotiation objective]
Developing a price negotiation objective for labor costs Selecting the appropriate contract type
Evaluating the bill of materials
Assigning the risk factors for profit calculations
46) When given a set of data that appears to contain outliers, which measure of central tendency is most appropriate to use? [Differentiate between the measures of central tendency and the methods for measuring dispersion]
Median
Coefficient of Determination Mean
Mode
47) When calculating the confidence interval, why is the sample standard deviation used to derive the standard error of the mean? [Identify the process for establishing a confidence interval] [Remediation
Accessed :N] The population standard deviation is not generally known The sample mean is used to derive the significance level The coefficient of variation is unknown
Other methods of central tendency are not reliable
48) Identify the first step in conducting stratified sampling. [Identify the process for using stratified sampling] [Remediation Accessed :N]
Identify items for 100% analysis
Randomly select a sample size equal to 20% of the total number of items Develop the decrement factor
Group like items together
49) Given the following data, calculate the standard deviation. Sample data: 13, 12, 9, 15, 11, 16, 17, 8, 12, 7, 12 [Calculate a pre-negotiation objective using the appropriate statistical analysis techniques]
3.19
3.05
4.12
4.21
50) Which of the following would be a proper method of determining the reasonableness of a contractor’s proposed labor hour estimate? [Relate proposed labor hours to work requirements to determine reasonableness of direct labor costs]
Compare proposed hours with a Government should-cost estimate Examine proposed hours on other contracts from the same contractor Decrement labor hours estimate according to DCAA standard decrement
Use a stratified sampling techniques to evaluate contractor’s labor hour estimate
51) Which of these situations warrants the use of a round-table estimate? [Examine proposed labor rates to determine a fair and reasonable pre-negotiation position]
A contract is for a unique item, and there is no historical data available (i.e., detailed drawings, bill of materials, firm specifications).
A contract is for a service that has been provided in the past, and offerors will need to submit data detailing the time it will take for each worker to complete a specific task.
A contract is for a service that has been provided in the past, and offerors will need to submit data detailing the time it will take for each worker to complete a specific task.
A contract is for $900,000 and there have been several similar contracts performed in the past. Usually, offerors will use comparison estimates for this type of work.
52) Which of the following labor categories in a contractor’s proposal for Grounds Maintenance would raise concern? [Identify proposed direct labor mix] [Remediation Accessed :N]
Millwright
Maintenance technician Project manager
Quality control manager
53) Which of the following is a grouping of all positions that share the same title and pay level?
[Identify labor classifications] [Remediation Accessed :N]
Position class Position description
Position classification plan Direct labor position
54) Which of the following is a grouping of all positions that share the same title and pay level?
[Identify types of other direct costs] [Remediation Accessed :N]
Position class Position description
Position classification plan Direct labor position
55) Which of the following is the statutory authority for requiring certified cost or pricing data? [Select the appropriate authority for requiring an offeror to provide cost or pricing data]
10 U.S.C. 2306(a)
10 U.S.C. 2304(a)
10 U.S.C. 941(b)
10 U.S.C. 2301(b) [Show Less]