FCR 110 Post Test Questions and Answers 2026 Update; Defense
Acquisition University Actual Exam 2026/2027 | Complete Exam-
Style Questions with Detailed Rationales | 100% Verified | Pass
Guaranteed – A+ Graded
Cost Analysis Fundamentals and Terminology
Q1: When distinguishing between cost estimating and cost analysis during a defense
acquisition program review, which statement best captures the primary role of cost
analysis?
A. Developing independent cost estimates from scratch using parametric models.
B. Evaluating the reasonableness, completeness, and accuracy of a contractor's proposed
cost estimate. [CORRECT]
C. Collecting historical data to build new cost estimating relationships for future programs.
D. Applying learning curve theory to project future production unit costs.
Correct Answer: B
Rationale: The best answer is evaluating the reasonableness, completeness, and accuracy of
a proposed estimate. Cost analysis focuses on assessing the contractor's data and
assumptions, whereas cost estimating involves developing the estimate itself.
Q2: A program manager asks you to explain why the budget request uses then-year dollars
instead of constant-year dollars. How should you respond?
A. Constant-year dollars are required for all official budget exhibits to Congress.
B. Then-year dollars reflect the actual amount of money that will be needed in the future
year of expenditure, including inflation. [CORRECT]
C. Then-year dollars strip out inflation to allow for apples-to-apples comparisons across
different fiscal years.
D. Constant-year dollars are used exclusively for contractor proposals, while then-year is for
government estimates.
Correct Answer: B
Rationale: This choice is correct because then-year dollars include the effects of inflation
and represent the actual cash flow required in the specific year the funds are obligated.
Constant-year dollars remove inflation for comparison purposes.
Q3: In the Defense Acquisition System, during which phase is the Initial Capabilities
Document (ICD) typically validated, setting the stage for early cost estimation?
A. Materiel Solution Analysis
B. Technology Maturation and Risk Reduction
C. Engineering and Manufacturing Development
D. Production and Deployment
Correct Answer: A
,Rationale: This aligns with the acquisition lifecycle, as the Materiel Solution Analysis phase is
where the ICD is validated to explore potential solutions and inform early cost and schedule
estimates.
Q4: You are reviewing a contractor's proposal and notice they have included facility capital
cost of money (FCCOM) in their overhead rate. What is your best course of action?
A. Accept it, as FCCOM is a standard allowable cost for all defense contractors.
B. Reject it, because FCCOM is only allowable for capital assets, not as an overhead rate
addition.
C. Evaluate it against the allowability criteria in the Federal Acquisition Regulation (FAR) and
DoD supplements, as it requires specific justification. [CORRECT]
D. Remove it entirely, since the DoD prohibits any form of capital cost of money in
contracts.
Correct Answer: C
Rationale: The best answer is to evaluate it against FAR and DoD supplement allowability
criteria. FCCOM can be allowable under specific circumstances, but it requires rigorous
justification and adherence to cost accounting standards.
Q5: Which of the following best describes a "should-cost" analysis in the context of defense
acquisition?
A. An estimate of what a program ought to cost based on historical data, independent of the
contractor's proposed price, to establish a negotiation objective. [CORRECT]
B. A detailed audit of the contractor's past performance to determine if they overcharged
on previous contracts.
C. The final negotiated price that the government agrees to pay after all audits are
complete.
D. A parametric estimate generated solely by the contractor to justify their proposed budget
to the government.
Correct Answer: A
Rationale: This choice is correct because a should-cost analysis represents the government's
independent assessment of what a product or service should reasonably cost, serving as a
baseline for negotiations and management.
Q6: A cost analyst is tasked with reviewing a software development estimate. The
contractor used a top-down approach based on a similar legacy system. What is the primary
risk the analyst should investigate?
A. The estimate may not account for the unique technical complexities and scope
differences of the new software. [CORRECT]
B. Top-down approaches are strictly prohibited by DoD policy for software development.
C. The contractor likely used constant-year dollars instead of then-year dollars.
D. The estimate will inherently underestimate the learning curve benefits of the new
development.
Correct Answer: A
Rationale: The best answer is that the estimate may not account for unique technical
complexities. Top-down approaches rely on analogies, and if the new system has significant
scope or technical differences, the historical baseline may not be valid.
, Q7: What is the fundamental purpose of an Independent Cost Estimate (ICE) in the DoD
acquisition process?
A. To replace the contractor's estimate entirely during the source selection process.
B. To provide decision-makers with an objective, unbiased assessment of a program's
expected cost, independent of program office advocacy. [CORRECT]
C. To ensure that the program's budget aligns perfectly with the contractor's initial proposal.
D. To calculate the exact profit margin the contractor will receive upon contract completion.
Correct Answer: B
Rationale: This aligns with the principle that an ICE provides an objective, unbiased
benchmark for decision-makers, free from the optimism bias or advocacy that might
influence a program office's internal estimate.
Q8: When discussing "cost as an independent variable" (CAIV), what is the core expectation
placed on the program team?
A. Cost is fixed after the Milestone B decision, and any overruns must be absorbed by the
contractor.
B. The program must balance performance, schedule, and cost, treating cost as a key design
parameter that trades off with performance. [CORRECT]
C. The program should prioritize maximum performance regardless of the resulting cost
growth.
D. Cost estimates are only used for reporting and do not influence engineering design
decisions.
Correct Answer: B
Rationale: This choice is correct because CAIV requires the program team to actively
manage cost as a fundamental design parameter, making deliberate trade-offs between
performance, schedule, and affordability throughout the acquisition lifecycle.
Q9: You encounter the term "Work Breakdown Structure" (WBS) in a program's cost report.
Why is a standardized WBS critical for cost analysis?
A. It guarantees that the contractor will not exceed the allocated budget for any specific
task.
B. It provides a common framework for organizing, defining, and comparing cost data across
different programs and contractors. [CORRECT]
C. It is primarily used by the scheduling team and has no direct impact on cost estimating.
D. It allows the government to dictate the contractor's internal accounting software choices.
Correct Answer: B
Rationale: The best answer is that it provides a common framework. A standardized WBS
ensures that cost data is organized consistently, enabling valid apples-to-apples
comparisons and effective aggregation of costs across the program.
Q10: A junior analyst asks you to define "direct costs" in a government contract. Which
example best illustrates a direct cost?
A. The electricity used to light the contractor's corporate headquarters.
B. The salary of the specific software engineer assigned full-time to develop the program's
radar module. [CORRECT]
C. The depreciation of the factory building where multiple different programs are
assembled.
Acquisition University Actual Exam 2026/2027 | Complete Exam-
Style Questions with Detailed Rationales | 100% Verified | Pass
Guaranteed – A+ Graded
Cost Analysis Fundamentals and Terminology
Q1: When distinguishing between cost estimating and cost analysis during a defense
acquisition program review, which statement best captures the primary role of cost
analysis?
A. Developing independent cost estimates from scratch using parametric models.
B. Evaluating the reasonableness, completeness, and accuracy of a contractor's proposed
cost estimate. [CORRECT]
C. Collecting historical data to build new cost estimating relationships for future programs.
D. Applying learning curve theory to project future production unit costs.
Correct Answer: B
Rationale: The best answer is evaluating the reasonableness, completeness, and accuracy of
a proposed estimate. Cost analysis focuses on assessing the contractor's data and
assumptions, whereas cost estimating involves developing the estimate itself.
Q2: A program manager asks you to explain why the budget request uses then-year dollars
instead of constant-year dollars. How should you respond?
A. Constant-year dollars are required for all official budget exhibits to Congress.
B. Then-year dollars reflect the actual amount of money that will be needed in the future
year of expenditure, including inflation. [CORRECT]
C. Then-year dollars strip out inflation to allow for apples-to-apples comparisons across
different fiscal years.
D. Constant-year dollars are used exclusively for contractor proposals, while then-year is for
government estimates.
Correct Answer: B
Rationale: This choice is correct because then-year dollars include the effects of inflation
and represent the actual cash flow required in the specific year the funds are obligated.
Constant-year dollars remove inflation for comparison purposes.
Q3: In the Defense Acquisition System, during which phase is the Initial Capabilities
Document (ICD) typically validated, setting the stage for early cost estimation?
A. Materiel Solution Analysis
B. Technology Maturation and Risk Reduction
C. Engineering and Manufacturing Development
D. Production and Deployment
Correct Answer: A
,Rationale: This aligns with the acquisition lifecycle, as the Materiel Solution Analysis phase is
where the ICD is validated to explore potential solutions and inform early cost and schedule
estimates.
Q4: You are reviewing a contractor's proposal and notice they have included facility capital
cost of money (FCCOM) in their overhead rate. What is your best course of action?
A. Accept it, as FCCOM is a standard allowable cost for all defense contractors.
B. Reject it, because FCCOM is only allowable for capital assets, not as an overhead rate
addition.
C. Evaluate it against the allowability criteria in the Federal Acquisition Regulation (FAR) and
DoD supplements, as it requires specific justification. [CORRECT]
D. Remove it entirely, since the DoD prohibits any form of capital cost of money in
contracts.
Correct Answer: C
Rationale: The best answer is to evaluate it against FAR and DoD supplement allowability
criteria. FCCOM can be allowable under specific circumstances, but it requires rigorous
justification and adherence to cost accounting standards.
Q5: Which of the following best describes a "should-cost" analysis in the context of defense
acquisition?
A. An estimate of what a program ought to cost based on historical data, independent of the
contractor's proposed price, to establish a negotiation objective. [CORRECT]
B. A detailed audit of the contractor's past performance to determine if they overcharged
on previous contracts.
C. The final negotiated price that the government agrees to pay after all audits are
complete.
D. A parametric estimate generated solely by the contractor to justify their proposed budget
to the government.
Correct Answer: A
Rationale: This choice is correct because a should-cost analysis represents the government's
independent assessment of what a product or service should reasonably cost, serving as a
baseline for negotiations and management.
Q6: A cost analyst is tasked with reviewing a software development estimate. The
contractor used a top-down approach based on a similar legacy system. What is the primary
risk the analyst should investigate?
A. The estimate may not account for the unique technical complexities and scope
differences of the new software. [CORRECT]
B. Top-down approaches are strictly prohibited by DoD policy for software development.
C. The contractor likely used constant-year dollars instead of then-year dollars.
D. The estimate will inherently underestimate the learning curve benefits of the new
development.
Correct Answer: A
Rationale: The best answer is that the estimate may not account for unique technical
complexities. Top-down approaches rely on analogies, and if the new system has significant
scope or technical differences, the historical baseline may not be valid.
, Q7: What is the fundamental purpose of an Independent Cost Estimate (ICE) in the DoD
acquisition process?
A. To replace the contractor's estimate entirely during the source selection process.
B. To provide decision-makers with an objective, unbiased assessment of a program's
expected cost, independent of program office advocacy. [CORRECT]
C. To ensure that the program's budget aligns perfectly with the contractor's initial proposal.
D. To calculate the exact profit margin the contractor will receive upon contract completion.
Correct Answer: B
Rationale: This aligns with the principle that an ICE provides an objective, unbiased
benchmark for decision-makers, free from the optimism bias or advocacy that might
influence a program office's internal estimate.
Q8: When discussing "cost as an independent variable" (CAIV), what is the core expectation
placed on the program team?
A. Cost is fixed after the Milestone B decision, and any overruns must be absorbed by the
contractor.
B. The program must balance performance, schedule, and cost, treating cost as a key design
parameter that trades off with performance. [CORRECT]
C. The program should prioritize maximum performance regardless of the resulting cost
growth.
D. Cost estimates are only used for reporting and do not influence engineering design
decisions.
Correct Answer: B
Rationale: This choice is correct because CAIV requires the program team to actively
manage cost as a fundamental design parameter, making deliberate trade-offs between
performance, schedule, and affordability throughout the acquisition lifecycle.
Q9: You encounter the term "Work Breakdown Structure" (WBS) in a program's cost report.
Why is a standardized WBS critical for cost analysis?
A. It guarantees that the contractor will not exceed the allocated budget for any specific
task.
B. It provides a common framework for organizing, defining, and comparing cost data across
different programs and contractors. [CORRECT]
C. It is primarily used by the scheduling team and has no direct impact on cost estimating.
D. It allows the government to dictate the contractor's internal accounting software choices.
Correct Answer: B
Rationale: The best answer is that it provides a common framework. A standardized WBS
ensures that cost data is organized consistently, enabling valid apples-to-apples
comparisons and effective aggregation of costs across the program.
Q10: A junior analyst asks you to define "direct costs" in a government contract. Which
example best illustrates a direct cost?
A. The electricity used to light the contractor's corporate headquarters.
B. The salary of the specific software engineer assigned full-time to develop the program's
radar module. [CORRECT]
C. The depreciation of the factory building where multiple different programs are
assembled.
