CLC 056-Analyzing Contract
Costs Exam-graded A+-2022-2023
WITH 55 Q&A
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contains 55 Questions
1) Which of the following must be true to properly classify a cost as an “other direct cost”? [Recognize concerns that affect the other direct costs proposed]
All of these
The proposed cost benefits only the proposed contract work
The offeror customarily treats similar costs as “other direct costs” under similar circumstances
The contractor’s accounting system segregates “other direct costs” from similar indirect costs
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]
Engineered, designed, fabricated, or modified to meet specific contract needs and cannot be used for other contracts
An item (e.g., fixture, pattern, or gauge) that is necessary in aiding the development of a unique product
Engineered, designed, fabricated, or modified to meet not only the requirements of the current contract but also the requirements of all other contracts
Developed and engineered by a subcontractor who is not currently working on another contract
3) Which of the following is an indirect cost pool? [Identify indirect cost pools and bases]
General and Administrative Expenses
Direct material
Assembly labor
Manufacturing labor
4) What two costs elements are required to calculate an indirect cost rate? [Identify the process of calculating indirect cost rates]
Expense pool and Allocation base
Overhead rate and Expense base
Allocation Pool and Expense base
Allocation base and Overhead rate
5) In which of the following phases does the contractor determine actual indirect cost rates?
[Identify the cost allocation cycle]
Final Allocation Phase
Beginning Payment Phase
Forward Pricing Phase
Billing Phase
6) How is simple linear regression used? [Identify what regression analysis is]
To make predictions about one dependent variable based on one independent variable
To make predictions about one dependent variable based on more than one independent variable
To calculate an estimate that demonstrates the most likely average value based on the data supplied
To ensure contractor’s estimates properly capture the reduction of labor costs associated with repetitive production tasks
7) Which regression method would be used when there is more than one independent variable? [Identify the different regression analysis methods]
Multivariate regression
Simple linear regression
Curvilinear regression
Segmented regression
8) Identify the situation where you would use simple linear regression. [Identify contract pricing situations where simple regression analysis should be considered]
Indirect cost rate analysis
Labor classification analysis
Facilities Capital Cost of Money calculation
Profit objective calculation
9) Which variable is also considered the independent variable? [Identify the steps for using simple regression analysis]
X
Z
R
https://learn.dau.mil/Atlas2/html/testengine/TestGeneration/test_review.jsp 9/27/2017
Y
10) Which of the following situations would the use of improvement curve analysis likely be useful in evaluating proposed costs? [Identify situations where improvement curve analysis would be appropriate]
Assembly line repair of a turret assembly for an M1/A2 Abrams tank
Assembly of two prototype aerial refueling airplanes
Fabrication of a single jet engine frame assembly Fabrication of a new aircraft carrier
11) What is the best method for determining an improvement curve slope? [Identify the steps for using improvement curve analysis]
Using actual historical data
Using the median percentage from similar products
Using established slopes from the Cost Estimator’s Reference Manual Using established slopes derived on recent procurements
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) Which of the following are factors used in calculating the Facilities Capital Cost of Money
(FCCOM) amount? [Recognize elements affecting facilities capital cost of money]
Proposal allocation base amounts
Percentage of land, building, and profit distributions
Company-wide allocation base amounts
Division-wide allocation base amounts
14) Which of the following is a factor that affects profit/fee calculations? [Identify the factors affecting profit/fee analysis]
Contract type
Distribution of equipment percentage
Magnitude of the contract in dollars
https://learn.dau.mil/Atlas2/html/testengine/TestGeneration/test_review.jsp 9/27/2017
Profit/fee percentage historically paid to contractor
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) What is the government’s primary objective in negotiations? [Identify factors that contribute to success in any negotiation]
To agree on a price that is fair and reasonable to the government and the contractor
To establish a profit/fee percentage that is in line with previous contracts with the particular contractor
To agree on each element of cost with the contractor
To ensure the agreed to price is the same, or lower, than the government’s objective
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) What is Certified Cost or Pricing Data subsequently found to have been inaccurate, incomplete, or noncurrent known as? [Identify terms associated with the Truth-in-Negotiations Act (TINA)] Defective Pricing
CICA Violation
Data other than cost or pricing data
Exception to certified cost or pricing data
24) Which of the following situations are considered exempt from the submission of Certified Cost or Pricing Data? [Determine if an exception to the Truth-in-Negotiations Act applies]
Prices are set by law or regulation
Sole source acquisition of $3.5M FFP effort; price determined using cost analysis
Price may be determined fair and reasonable based on price analysis proposal techniques
Non-commercial modification of a commercial item. Modification funded by DoD and constitutes 5% of value of modification
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) Which of the following situations would exempt a contract or subcontract from CAS coverage?
[Identify the exemptions to Cost Accounting Standards (CAS) coverage]
The contract or subcontract is with a small business
Value of the contract or subcontract is $7.5M or less
The Economic Price Adjustment clause for a commercial item is based on an index formulated with a contractor’s historical cost data
Sole source firm fixed price contract requiring submission of cost or pricing data
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) Which of the following situations would require a Disclosure Statement? [Identify the purpose of a Disclosure Statement]
Contractor receives a CAS covered contract or a subcontract valued at $50M in a cost accounting period
Contractor receives a contract valued at $7.5M or greater
Anytime a cost reimbursement contract is awarded Anytime a sole-source contract is awarded
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) A contractor submits a cost proposal and includes irrefutable evidence that their proposed costs are exactly what they would incur. Which of the following determinations concerning reasonableness is correct? [Determine if a cost is reasonable]
The government assumes no presumption of reasonableness to the incurrence of costs by a contractor
The proposed costs are considered reasonable unless the Government can prove otherwise
There is no argument as the proposed costs are clearly allowable
Irrefutable proof of actual costs shall be accepted by the Government as reasonable
32) The pre-negotiation objective establishes the government's initial negotiation position and assists the contracting officer in determining a fair and reasonable price. How does proposal modeling assist the contracting officer in achieving these objectives? (Choose all that apply) [Identify the rationale for modeling a contractor’s cost proposal]
Validates the contractor's computations
Facilitates update of pre-negotiation position upon receipt of updates from the contractor (e.g.
updated quotes, subcontractor submissions, change in rates)
Validates the contractor's proposal summary with detailed back-up data worksheets
Allows real time calculation of offers and counteroffers during negotiations
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 cost accounting systems that are used by a contractor manufacturing a number of identical units for multiple customers are: [Identify the two commonly used systems for cost accounting]
Generally Accepted Accounting Practice
Process Cost System
of 12
Cost Accounting Standards Job Order Accounting
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 [Show Less]