Cost & Pricing Exam 3

Question 1

The reference guides prepared by AFIT and FAI that provide guidance to pricing and negotation personnel?

Answer 1

Cost and Pricing Reference Guide

Question 2

Fair and reasonable price

Answer 2

amount that a prudent buyer would pay for something

Question 3

Price analysis

Answer 3

process of examining and evaluating a proposed price to determine if it is fair and reasonable, without evaluating its separate cost elements and proposed profit

Question 4

Cost analysis

Answer 4

review and evaluation of the separate cost elements and proposed profit/fee of an offeror’s certified cost and pricing data

Question 5

What is the best price analysis method?

Answer 5

competition

Question 6

Equation to calculate the percentage change between two indices

Answer 6

% change = NI / OI x 100 - 100

Question 7

Fixed cost

Answer 7

a cost that remains constant, even as activity level changes

Question 8

Variable cost

Answer 8

a cost that increases or decreases with respect to each change in activity level

Question 9

Semi-variable cost

Answer 9

a cost that includes a fixed and variable element

Question 10

What is the FPRA and who develops it?

Answer 10

Forward Pricing Rate Agreement

Administrative Contracting Officer (ACO) develops this

It is negotiated between the KTR and the KO

Question 11

Price-related factor

Answer 11

adjustments required by law or regulation in order to complete price evaluation

Question 12

What type of analysis is always required?

Answer 12

Price analysis

Question 13

(T/F) - No final cost objective shall have allocated to it as a direct cost any cost, if other costs incurred for the same purpose in like circumstances have been included in any indirect cost pool to be allocated to that or any other final cost objective

Answer 13

True

Question 14

Direct cost

Answer 14

cost tied to a single element or one cost objective

Question 15

Indirect cost

Answer 15

any cost that can be tied to more than one cost objective

Question 16

Cost of money

Answer 16

an imputed (or hypothetical) measure of the cost of capital related to facilities investment that is calculated using a rate set by the Secretary of the Treasury

Question 17

How do you calculate cost of money?

Answer 17

factor multiplied by the category (base)

Question 18

When is cost realism analysis required?

Answer 18

for all cost type contracts

Question 19

What is the equation to determine overhead or indirect cost?

Answer 19

Rate = Pool divided by Base

Question 20

Two types of indirect costs

Answer 20

Overhead

General and Administrative (G and A)

Question 21

Why is G and A different?

Answer 21

accounts for general and executive office, staff services (legal, accounting, financial, etc), selling and marketing

Question 22

What are the limits on profit and fee?

Answer 22

Profit: no limit
R and D: 15%
A and E / public works: 6%
Other: 10%

Question 23

(T/F) - Profit cannot be charged on cost of money. We do not apply profit to cost of money.

Answer 23

True

Question 24

(T/F) - If you have advertised a solicitation for less than 30 days and only receive one quote, you have to re-solicit it. If you then only get one offer, you may or may not negotiate the action

Answer 24

False

You MUST negotiate

Question 25

FOB Origin

Answer 25

government picks up the deliverable from the contract for facility. Risk of loss and damage passes to the government immediately upon acceptance, prior to and during transit

the government takes the risk as soon as it leaves the KTR’s possession

Question 26

FOB Destination

Answer 26

KTR bears the expense of transporting the item to the government’s desired location. Risk of loss and damage passes to the government on arrival after acceptance

Question 27

When do you negotiate profit

Answer 27

Last

Question 28

What are the DCAA proposal evaluation thresholds?

Answer 28

Fixed: $10 million

Cost-Resimbursable: $100 million

Question 29

Who conducts pre-award surveys?

Answer 29

DCMA

Question 30

(T/F) - At a minimum, per FAR Part 15, you must analyze material and labor, how much and what kind during a technical evaluation

Answer 30

True

Question 31

How do you calculate profit?

Answer 31

Revenue minus total cost

Question 32

What things can we not do when dealing with rates?

Answer 32

Develop or approve overhead rates

Approve accounting systems

Question 33

(T/F) - The FAR requires that you include any facilities of cost of capital included in cost objective before applying profit or fee factors

Answer 33

False

Question 34

What is facilities capital?

Answer 34

the net book value of tangible capital assets that are subject to depreciation (buildings and equipment - NOT land)

Question 35

What does CAS stand for?

How many are there and what are the exceptions?

Answer 35

Cost Accounting Standards

• 19 Standards
• 4 Standards for modified CAS coverage (401, 402, 405, 406)
• small businesses are exempt
• same exceptions as TINA