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Defense Acquisition University CLC CLC 056| CLC 056 (7 sets for the final exams) Complete questions and answers

CLC 056 (7 sets for the final exams) Analyzing Contract Costs Exam Back to Status page 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] Travel Direct Material G&A Overhead Utilities 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) Which of the following is a phase in the allocation cycle? [Identify the cost allocation cycle] Final Allocation Phase Interim Processing Phase Adjustment on Rates Phase Continuous Rate Application Phase 6) How is simple linear regression used? [Identify what regression analysis is] [Remediation Accessed :N] 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 assumes a linear relationship between the dependent and independent variables? [Identify the different regression analysis methods] Simple linear regression Local regression Segmented regression Curvilinear 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) 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] "Goodness" of the fit and statistical significance Coefficient of determination and the median Prediction interval and significance level Standard error of the estimate and the mean 10) Which situation below would you use improvement curve analysis to evaluate proposed costs? [Identify situations where improvement curve analysis would be appropriate] Assembly line with high proportion of manual labor Fully automated assembly line Production facility specializing in “one-off” or unique item production Fabrication plant that generates 100,000 units per month 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) Analyzing Contract Costs Exam Here is your test result.The dots represent the choices you have made. The highlighted questions are the questions you have missed. Remediation Accessed shows whether you accessed those links.'N' represents links not visited and 'Y' represents visited links. Back to Status page contains 15 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) In reviewing the proposal for the robotic surveillance vehicle you asked for clarification on the travel cost listed as an ODC. Which response would justify travel as an ODC? [Determine if the other direct costs are properly proposed] The travel costs are for the project manager and the manufacturing supervisor to deliver the prototype to the Government testing site for final demonstration testing. The travel costs are for several senior engineers to attend a conference on the latest development in manufacturing. The travel costs are for the corporate vice president to attend the annual robotic association meeting. The travel costs are for warehouse personnel to attend OSHA training on how to safely handle hazardous materials. 3) Which variable is also considered the independent variable? [Identify the steps for using simple regression analysis] X Z R Y 4) Which situation below would you use improvement curve analysis to evaluate proposed costs? [Identify situations where improvement curve analysis would be appropriate] [Remediation Accessed :N] Assembly line with high proportion of manual labor Fully automated assembly line Production facility specializing in “one-off” or unique item production Fabrication plant that generates 100,000 units per month 5) 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 Profit/fee percentage historically paid to contractor 6) 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 7) 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 8) 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 9) 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 10) 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 11) 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 12) Select the item below that would likely be categorized as a Direct Material cost. [Identify the different types of material costs] [Remediation Accessed :N] The purchase of 104 motor assemblies needed to manufacture a product Rail transportation used to get the materials to the offeror's facility Extra material or items that are left over from the contract and cannot be used Washers and seals used in the assembly process for all products 13) Which three elements are necessary for calculating a confidence interval? [Identify the process for establishing a confidence interval] Sample mean, t-value, standard error of the mean Mean, median, and mode Variance, t-value, sample mean 14) Identify the first step in conducting stratified sampling. [Identify the process for using stratified sampling] 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 15) 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 Analyzing Contract Costs Exam Here is your test result.The dots represent the choices you have made. The highlighted questions are the questions you have missed. Remediation Accessed shows whether you accessed those links.'N' represents links not visited and 'Y' represents visited links. Back to Status page 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 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 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 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 37) Select the item below that would likely be categorized as a Direct Material cost. [Identify the different types of material costs] The purchase of 104 motor assemblies needed to manufacture a product Rail transportation used to get the materials to the offeror's facility Extra material or items that are left over from the contract and cannot be used Washers and seals used in the assembly process for all products 38) Which of the following is true about analyzing summary cost estimates? [Determine the fairness and reasonableness of summary level cost estimates] Using a direct comparison with the cost of a similar contract effort is an acceptable summary estimating technique As the dollars and percentage of total costs increase, the emphasis on obtaining a detailed estimate decreases The effects of price inflation are not considered in determining if direct comparisons were properly developed and applied If a summary level estimate is as good as a detailed analysis, it is still required to use a detailed analysis 39) Identify the objective of performing proposal analysis. [Identify the fundamentals of cost analysis] To ensure the final agreed to price is fair and reasonable To ensure the government negotiates the lowest possible price for goods and services To provide the contract negotiator the best possible profit or fee objective To gain a more complete understanding of the company’s rates and factors 40) Identify the correct definition of “Cost Realism Analysis.” [Distinguish between cost analysis, price analysis, and cost realism analysis] The process of independently reviewing and evaluating specific elements of cost, in part to determine whether they reflect a clear understanding of the requirement The review of a proposal to ensure the contractor has properly documented adherence to their approved estimating system guidelines The review and evaluation of individual cost elements, excluding profit, in a proposal The process of examining and evaluating a proposal to ensure all elements of cost are in line with the Independent Government Estimate 41) Which of the following is known as a “Questioned Cost”? [Identify the various types of audits] 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) Which three elements are necessary for calculating a confidence interval? [Identify the process for establishing a confidence interval] Sample mean, t-value, standard error of the mean Mean, median, and mode Variance, t-value, sample mean 48) Identify the first step in conducting stratified sampling. [Identify the process for using stratified sampling] 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] 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] 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] 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) Analyzing Contract Costs Exam Here is your test result.The dots represent the choices you have made. The highlighted questions are the questions you have missed. Remediation Accessed shows whether you accessed those links.'N' represents links not visited and 'Y' represents visited links. Back to Status page contains 32 Questions 1) What is the most common base for calculating the General and Administrative (G&A) overhead rate? [Identify indirect cost pools and bases] [Remediation Accessed :N] Total of all costs Total price Total G&A expense Total management cost 2) What two costs elements are required to calculate an indirect cost rate? [Identify the process of calculating indirect cost rates] [Remediation Accessed :N] Expense pool and Allocation base Overhead rate and Expense base Allocation Pool and Expense base Allocation base and Overhead rate 3) How is simple linear regression used? [Identify what regression analysis is] [Remediation Accessed :N] 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 4) When using simple linear regression to analyze the estimated price for a used car, which of the following independent variables would result in a realistic estimating equation? [Identify contract pricing situations where simple regression analysis should be considered] [Remediation Accessed :N] Mileage of all similar cars Prices of all similar cars currently for sale Weight of all similar cars Color of all similar cars 5) Which variable is also considered the independent variable? [Identify the steps for using simple regression analysis] X Z R Y 6) 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] [Remediation Accessed :N] 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 7) What is the first step in conducting improvement curve analysis? [Identify the steps for using improvement curve analysis] [Remediation Accessed :N] Collect the historical data Calculate the rate of improvement Calculate the slope of the curve Determine the Theoretical value of unit #1 8) 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 9) When calculating profit/fee, how is the “performance risk (composite)” calculated? [Calculate a profit/fee using the appropriate structured approach] [Remediation Accessed :N] By multiplying the assigned weight by the assigned value of the technical and the management/cost control element, and adding the two together By adding the assigned weights and assigned values of the technical and management/cost control elements By multiplying the assigned values of the technical and management/cost control elements By adding the assigned weight and assigned value of the technical and management/cost control elements and dividing the sum by 2 10) What would be the maximum fee you might negotiate for a cost plus fixed fee contract for advisory and assistance services contract? [– Develop a pre-negotiation position for profit or fee that is fair and reasonable.] 10% 1% 6% 15% 11) 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 12) 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 13) 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)] [Remediation Accessed :N] 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 14) 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] [Remediation Accessed :N] 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 15) 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 16) A cost is allocable if it: [Determine if a cost is allocable] [Remediation Accessed :N] Is incurred specifically for the contract Is reasonable and allowable Is distributed equally among the benefiting contracts Results in an inequitable allocation of costs. 17) Which of the following is the best method for determining if a proposed cost is reasonable? [Determine if a cost is reasonable] [Remediation Accessed :N] 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 18) When is it most appropriate to document or model a contractor’s proposal? [Identify the rationale for modeling a contractor’s cost proposal] [Remediation Accessed :N] 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 19) Which of the following is required in the contractor’s proposal when Cost or Pricing Data are required? [Identify the required cost elements in FAR Table 15-2] Documentation of agreed to procedures for validating each basis of estimate Forecasts for any planned facility capital improvements Data showing that adequate price competition for acquisitions exceeding the TINA threshold was obtained Basis for establishing proposed profit or fee 20) 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] [Remediation Accessed :N]  Generally Accepted Accounting Practice Cost Accounting Standards Process Cost System Job Order Accounting 21) Select the item below that would be categorized as an Indirect Material cost. [Identify the different types of material costs] [Remediation Accessed :N] 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 22) 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 23) 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 24) Which sampling technique is used to focus on high-value items? [Determine the appropriateness of the offeror's cost estimating methodology] [Remediation Accessed :N] Stratified Random Cluster Nonprobability 25) Which of the following is an effective use of stratified sampling? [Establish the fairness and reasonableness of detailed quantity estimates] [Remediation Accessed :N] 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 26) Which inventory pricing method is being used when a company recalculates inventory prices every time a new item is added to the inventory? [Evaluate the reasonableness of unit cost estimates] [Remediation Accessed :N] Moving Average Weighted Average Standard Cost Last In/First Out (LIFO) 27) 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 28) A measure of the amount of dispersion, or distance, between data points is the: [Differentiate between the measures of central tendency and the methods for measuring dispersion] [Remediation Accessed :N] Standard Deviation Absolute dispersion Relative dispersion Coefficient of variation 29) 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 30) 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. 31) Which of the following is a grouping of all positions that share the same title and pay level? [Identify labor classifications] Position class Position description Position classification plan Direct labor position 32) Which of the following is a grouping of all positions that share the same title and pay level? [Identify types of other direct costs] Position class Position description Position classification plan Direct labor position Exam Here is your test result.The dots represent the choices you have made. The highlighted questions are the questions you have missed. Remediation Accessed shows whether you accessed those links.'N' represents links not visited and 'Y' represents visited links. Back to Status page contains 55 Questions 1) Which of the following is true about analyzing summary cost estimates? [Determine the fairness and reasonableness of summary level cost estimates] Using a direct comparison with the cost of a similar contract effort is an acceptable summary estimating technique As the dollars and percentage of total costs increase, the emphasis on obtaining a detailed estimate decreases The effects of price inflation are not considered in determining if direct comparisons were properly developed and applied If a summary level estimate is as good as a detailed analysis, it is still required to use a detailed analysis 2) Identify when cost analysis is required. [Identify the fundamentals of cost analysis] [Remediation Accessed :

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