CLC 056 Analyzing Contract Costs Exam
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1. 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?
a. All of these are correct
b. 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.
c. The modification of any sealed bid or negotiated contract
d. The award of any negotiated contract (except for undefinitized actions such as letter contracts.
2. What is the best method for determining an improvement curve slope?
a. Using the median percentage from similar products
b. Using established slopes from the Cost Estimator’s Reference Manual c. Using actual historical data
d. Using averages derived from recent procurements
3. Each Price Negotiation Memorandum must contain which one of the following?
a. Statement that the price is fair and reasonable b. Signature of the Contract Specialist
c. Signature of the Legal Counsel
d. Statement that the FAR was consistently followed.
4. Which sampling technique is used to focus on high-value items?
a. Random b. Stratified c. Cluster
d. Nonprobability
5. Which of the following type of costs would most likely be categorized as both direct costs and indirect costs, depending on the circumstance?
a. G&A Overhead b. Utilities
c. Direct Material d. Travel Expense
6. Using a direct comparison with the cost of a similar contract effort is an acceptable summary estimating technique.
a. True b. False
7. Identify when cost analysis would be required.
a. For all proposals exceeding the micro purchase threshold b. Whenever a price proposal is received
c. When certified cost or pricing data are required
d. To evaluate profit or fee
8. What two costs elements are required to calculate an indirect cost rate?
a. Expense pool and Allocation base b. Overhead rate and Expense base c. Allocation Pool and Expense base
d. Allocation base and Overhead rate
9. 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?
a. 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.
b. The travel costs are for several senior engineers to attend a conference on the latest development in manufacturing.
c. The travel costs are for the corporate vice president to attend the annual robotic association meeting.
CLC 056 Revision questions
1. One of the elements of the government pricing objective is to ensure that contract prices are fair and reasonable. Which of the following statements is true about "fairness to seller" that involve concerns? (Select all that apply): -
Sellers need to be concerned about an unrealistic low price because of the risk
- Sellers need to be concerned about the market implications of a price that is too high
- Sellers need to be concerned about major mistakes in estimating costs
- Sellers need to be concerned about recovering buy-in losses
2. Which of the following are market conditions that affect a reasonable price?: - Competition
- Supply and Demand
- General Economic Conditions
3. All of the following statements are true about government contracting as part of pricing each contract separately EXCEPT:: - Buyers and sellers usually have a good working knowledge of transactions between a contractor and the government
4. Which of the following is the correct definition of a contingency in gov- ernment contracting?: - Possible future event arising from known or unknown causes where the outcome cannot be determined
5. You have been asked to procure seven high definition mobile cameras.You determine that this is a commercial item. The prices for these items range from approximately $400,000 to $650,000 each. You identify six vendors but you only receive one offer from Advanced Technology Solutions (ATS). You contact ATS and they are willing to provide quantities, dates of sale, discounts offered, and prices offered to their other customers. What analysis of ATS's offer should you use?: Price analysis
6. In reviewing the acquisition plan, which form of proposal analysis do you think the Contracting Officer contemplated using prior to soliciting offers?: Price analysis
7. Which of the following estimating methods produces estimates based on an analysis of the methods and materials required to complete each element of the work required by the contract?: Detailed
8. Which of the following are key terms associated with TINA?: - Certified Cost or Pricing Data
- Cost or Pricing Data
- Data Other than Certified Cost or Pricing Data
9. Review Section B of the Acquisition Plan for the initial BBOMs contract. Did the Truth in Negotiation Act apply to this initial procurement? Why or why not?: No. While the initial award amount exceeded the TINA threshold of $2 million, the Contracting Officer determined through market research that adequate price competition would exist for this requirement. Therefore, the exception at FAR
15.403-1(b)(1) applied. Offerors were not required to submit certified cost or pricing data.
10. A noncommercial modification valued at $20.9 million is required for the BBOMs contract. Will we require the submission of certified cost or pricing data on this modification?: Yes. Since the initial estimate of this modification is
$20.9M, it is over the threshold of $2 million and therefore requires the offeror to submit certified cost or pricing data.
11. What gives us the authority to request the submission of certified cost or pricing data on this modification?: TINA and FAR 52.215-21
Unless an exception applies, TINA and FAR 52.215-21 require the submission of certified cost or pricing data for any modification expected to exceed the current threshold, regardless of whether or not certified cost or pricing data were initially required
12. What clause in the FAR provides a remedy to the government in the event the contractor submits defective certified cost or pricing data on this modification?: FAR 52.215-11, Price Reduction for Defective Certified Cost or Pricing Data - Modifications
13. Which of the following are exemptions to the Cost Accounting Stan- dards?: - small businesses
- contracts based on established or market prices fixed by law or regulation
- all contracts awarded using sealed bidding
14. Using the CAS Coverage and Disclosure Statement Determination flow- chart, determine if the original (basic) BBOMs contract is subject to CAS?-
: Yes, none of the listed exemptions apply. Since this is a negotiated procurement in excess of $7.5M, the contract is covered by the Cost Accounting Standards
15. Select the Resources tab to review the BBOMs contract and then answer the following question. Now that you have determined that the BBOMs contract is subject to CAS, what level of coverage is applicable?
Note: Technology and Support Services has never received a CAS covered
contract either in the current or preceding Cost Accounting Period.: Full coverage since the contract award is for $50M or more.
16. Look at the BBOMS contract again. Which of the following statements is true?: Since the BBOMS contract is subject to full CAS coverage, TSS is required to submit a Disclosure Statement to the CFAO and the Cognizant Auditor.
17. A cost is allowable if it .: - is reasonable
- is allocable
- is IAW CAS or GAAP as applicable
- is IAW the terms of the contract
- is IAW FAR Part 31
18. A cost is allocable if it is assignable or chargeable to one or more cost objectives on the basis of relative benefits received or an other eq- uitable relationship. A cost is allocable to a government contract if it
.: - is incurred specifically for the contract
- is necessary to the overall operation of the business, although a direct relationship to any particular cost objective cannot be shown
- benefits the contract and other work, and can be distributed to them in reasonable proportion to the benefits received
19. A contractor proposes to use a Level III Engineer for a particular task order under a cost reimbursement CLIN. The Level III Engineer labor rate is
$85.00 per hour.
Your technical specialist informs you that the level of effort required under this task is suitable for a Level I Engineer. The contractor proposes 40 hours to perform the task. Your technical specialist informs you that it should take the Level I Engineer approximately 35 hours to perform this task.
Is the cost for engineering labor reasonable for this task? (Select all that apply): - No, in order for a cost to be reasonable it must be, in both nature and amount, what a prudent business person would pay in the conduct of a competitive business.
- No, the burden of proof is on the contractor to demonstrate the reasonableness of the level of engineer and number of hours required
20. The prenegotiation objective establishes the government's initial nego- tiation 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? Select all of the correct answers.: - Validates the contractor's computations
- Validates the contractor's proposal summary with detailed back-up data work- sheets
-Allows real time calculation of offers and counteroffers during negotiations
-Facilitates update of prenegotiation position upon receipt of updates from the contractor
-Allows the government to identify differences between the contractor's proposed amounts and the prenegotiation position due to fact-finding results, field pricing assistance, independent government estimates and analysis
21. Which of the following are cost elements?: - labor
- G&A
-FCCOM
22. Which of the following are characteristics of an acceptable cost estimat- ing system?: - provides for detection and timely correction of errors
-identifies the sources of data and the estimating methods and rationale used in developing cost estimate
-provides a written description of the organization and duties of the personnel responsible for preparing, reviewing, and approving cost estimates.
23. What are the disadvantages of an inadequate Cost Accounting System?-
: It will provide data that is not current, accurate, and complete.
24. Under which cost accounting system does the firm account for output by specifically identifiable physical units?: Job-Order
25. Select the Resources tab to review the DCAA audit report. After reviewing the report, answer the following question:
What step should you take next?: Contact the DCMA to verify that Technology and Support Services' accounting and estimating systems are still considered adequate.
26. Who typically provides Audit Assistance?: Defense Contract Audit Agency
27. You are reviewing historical contract information for a firm that has recently submitted a proposal. Which of the following items might be an indication that you will require technical or audit assistance?: - the offeror has a history of not providing adequate cost estimate support
- the offeror has a history of under estimating costs
- in previous contracts, the negotiated price was significantly different than the proposed price
28. After you have reviewed the contents of the proposal and determined the scope of the audit necessary, select the correct order of the steps required to request audit assistance.
1. Commit your request to writing.
2. Contact the cognizant agency by phone to tell them of the upcoming request and to determine the means of communication acceptable for the assistance request.
3. Query all acquisition team members.: 3,2,1
29. Which of the following questions are important to ask when evaluating a report's strengths and weaknesses?: - Does the report answer the questions in your request?
- Does the report explain the evaluator's position in clear language that you can understand?
- Does the report support its conclusions?
30. Which of the following situations should you consider subcontractor proposal analysis?: - the business relationship between the prime contractor and the subcontractor is not conducive to independence and objectivity
-the prime contractor is a sole source and the subcontract cost represents a substantial part of the proposed contract cost
-the prime contractor has been denied access to the subcontractor's records
31. Which of the following are significant contract events which should be identified in a request for field pricing support when negotiating an equitable adjustment?: - date of submission of initial contract proposal and dollar amount
-date of alleged delays or disruptions
-date entitlement to an equitable adjustment was determined or a Contracting
Officer decision was rendered
-dates of any pertinent government actions or other key events during contract performance, which have an impact on the contractor's request for equitable adjustment
Analyzing Contract Costs Exam
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1.) Which of the following must be true to properly classify a cost as an “other direct cost”?
The offeror customarily treats similar costs as “other direct costs” under similar circumstances
The proposed cost benefits only the proposed contract work
The contractor’s accounting system segregates “other direct costs” from similar indirect costs
All of these
2.) Which of these statements below is correct regarding the criteria for classifying a special test equipment cost as an "other direct cost”?
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
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 specific contract needs and cannot be used for other contracts
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3.) 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 price
Total G&A expense
Total management cost
Total of all costs
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4.) 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
Allocation base and Overhead rate
Overhead rate and Expense base
Allocation Pool and Expense base
5.) In which of the following phases does the contractor determine actual indirect cost rates?
Billing Phase
Forward Pricing Phase
Beginning Payment Phase
Final Allocation Phase
6.) Which of the following situations would you most likely employ linear regression techniques?
Comparing the proposed costs of a new computer database with the historical costs of all recent
contracts in your office
Calculating the mean cost of one individual unit in a production run of 10,000 units
Estimating the cost of a new armored vehicle based on historical costs of similar procurements
Analyzing the accuracy of a should-cost analysis generated by a DCMA Industrial Engineer
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7.) Which regression method would be used when there is more than one independent variable? |
[Identify the different regression analysis methods] |
[Remediation Accessed: N] |
Multivariate regression
Segmented regression
Curvilinear regression
Simple linear regression
8.) Identify the situation where you would use simple linear regression.
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?
Y
Z
X
R
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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] |
[Remediation Accessed: N] |
Fabrication of a single jet engine frame assembly
Assembly of two prototype aerial refueling airplanes
Assembly line repair of a turret assembly for an M1/A2 Abrams tank
Fabrication of a new aircraft carrier
11.) What is the first step in conducting improvement curve analysis?
Determine the Theoretical value of unit #1
Collect the historical data
Calculate the slope of the curve
Calculate the rate of improvement
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12.) Given the following improvement curve data, calculate the cost objective for unit #64. • Labor hours for unit #32: 42,000 hours • Labor hours for unit #1: 79,000 hours • Rate of improvement: 20% • Improvement curve slope: 80% |
15,800
8,400
62,200
33,600
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- Profit/fee is calculated differently depending on DPAS rating of the contract
- Profit/Fee is calculated once for the basic contract and must not be recalculated on subsequent modifications
- Profit/fee objectives are a product of risk
- Profit/fee objectives are reduced by the cost efficiency factor
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15.) When calculating profit/fee, how is the “performance risk (composite)” calculated? |
[Calculate a profit/fee using the appropriate structured approach] |
[Remediation Accessed: N] |
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
By multiplying the assigned weight by the assigned value of the technical and the management/cost control element, and adding the two together
16.) What would be the maximum fee you might negotiate for a cost plus fixed fee contract for advisory and assistance services contract?
- 15%
- 1%
- 10%
- 6%
17.) Which of the following factors is critical to a successful negotiation?
The negotiation should be competitive
Avoid being too friendly, in case the negotiations get difficult
Effectively prepare, plan, and communicate
Set your opening position extremely low to give room to negotiate
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?
Win-Lose-Win
Lose-Lose
Win-Lose
Win-Win
19.) What is an important driver to a successful negotiation?
Ensure your position is heard
Obtain the lowest price for the government
Listen to understand
Maintain position of power
20.) What is the single most important decision the Contracting Officer must make to mitigate cost risk?
Whether to solicit to large business, or set aside for small business only
The profit/fee percentage objective
Selection of contract type
The selection of a the awardee
21.) Each Price Negotiation Memorandum must contain which of the following?
Statement that the price is fair and reasonable
Signature of the Legal Counsel
Signature of the Contract Specialist
Statement that the FAR was consistently followed
22.) According to FAR 15.4, which of the following is one of the two most preferred price analysis techniques?
Comparison of proposed prices with Independent Government Estimates (IGE)
Comparison with competitive published price lists
Comparison of proposed prices received in response to the solicitation
Use of parametric estimating methods to highlight significant inconsistencies
23.) What is Certified Cost or Pricing Data subsequently found to have been inaccurate, incomplete, or noncurrent known as?
Defective Pricing
Data other than cost or pricing data
Exception to certified cost or pricing data
CICA Violation
24.) Which of the following situations are considered exempt from the submission of Certified Cost or Pricing Data?
Prices are set by law or regulation
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
Sole source acquisition of $3.5M FFP effort; price determined using cost analysis
25.) When the Contracting Officer has relied on certified cost or pricing data in the price determination, which of the following statements is true?
They must certify that they relied on that certified cost or pricing data in the Price Negotiation
They acknowledge their reliance on that cost or pricing data by signing the Price Negotiation
Memorandum
They are not required to certify that they relied on that cost or pricing data in the Price
Negotiation Memorandum
They must have had legal counsel review the cost or pricing data prior to negotiations
26.) Which of the following situations would exempt a contract or subcontract from CAS coverage?
Value of the contract or subcontract is $7.5M or less
The contract or subcontract is with a small business
Sole source firm fixed price contract requiring submission of cost or pricing data
The Economic Price Adjustment clause for a commercial item is based on an index formulated
with a contractor’s historical cost data
27.) Which contract clause is inserted in contracts that are subject to full CAS coverage?
FAR 52.230-3 Disclosure and Consistency of Cost Accounting Practices
FAR 52.230-2 Cost Accounting Standards
FAR 52.230-5 Cost Accounting Standards – Educational Institutions
FAR 52.230-1 Cost Accounting Standards Notices and Certification
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28.) What is the definition of a Disclosure Statement? |
[Identify the purpose of a Disclosure Statement] |
[Remediation Accessed: N] |
Certified record of all internal contractor rates and factors
Confidential document identifying all potential conflicts of interest that may arise as a result of a
particular contract award
A statement submitted by the contractor identifying the basis of estimate for each individual cost
element contained in their proposal
Written description of a contractor’s cost accounting practices and procedures
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29.) A cost is allowable if it is: |
[Determine if a cost is allowable] |
[Remediation Accessed: N] |
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
Reasonable, allocable and compliant with CAS/GAAP
Established, disclosed and allocated
30.) A cost is allocable if it:
Results in an inequitable allocation of costs.
Is distributed equally among the benefiting contracts
Is incurred specifically for the contract
Is reasonable and allowable
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31.) 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] |
Performing a quantitative analysis of the proposed cost using multivariate regression
Comparing with other competitive proposals received in response to the solicitation
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?
When the value, importance, and complexity warrant
Anytime you award a competitive contract
When analyzing multiple commercial supply proposals
Whenever there are values in excess of $1M included in the proposal
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Process Cost System
Job Order Accounting
Cost Accounting Standards
Generally Accepted Accounting Practice
35.) The purpose of an audit is to:
Determine if the data is accurate and complete
All of these are correct
Determine the degree of compliance with established procedures
Verify transaction legality
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36.) How may you request an audit? |
[Identify the process for requesting an audit and the key players involved with the process] |
[Remediation Accessed: N] |
By mail
All of these are correct
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By e-mail
By telephone call
37.) Select the item below that would likely be categorized as a Direct Material cost.
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
The purchase of 104 motor assemblies needed to manufacture a product
38.) Which of the following is true about analyzing summary cost estimates?
Using a direct comparison with the cost of a similar contract effort is an acceptable summary
estimating technique
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
As the dollars and percentage of total costs increase, the emphasis on obtaining a detailed
estimate decreases
39.) Identify when cost analysis is required.
On all proposals exceeding the Simplified Acquisition Threshold
To evaluate each individual proposal cost element including FCCOM and profit or fee
Whenever a cost proposal is received
To evaluate the reasonableness of individual cost elements when certified cost or pricing data are
required
40.) Identify the correct definition of “Cost Realism Analysis.”
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
The process of independently reviewing and evaluating specific elements of cost, in part to
determine whether they reflect a clear understanding of the requirement
41.) Which of the following is known as a “Questioned Cost”?
Costs that have not yet been evaluated
Costs on which audit action has been completed and which are not considered as acceptable as a
contract cost
Arithmetic difference between the amount proposed and the sum of the related questioned,
unsupported, and unresolved amounts
Costs which the auditor cannot evaluate as allowable or unallowable, because there is not enough
information for analysis
42.) Which sampling technique is used to focus on high-value items?
Nonprobability
Stratified
Random
Cluster
43.) Which of the following is an effective use of stratified sampling?
Analyzing 10% of the items selected randomly
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
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44.) When material prices may vary significantly from current inventory values, which estimating method should be used? |
[Evaluate the reasonableness of unit cost estimates] |
[Remediation Accessed: N] |
Historical Quotes
Long Term Agreement Pricing
Inventory Pricing
Current Quotes
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Mean
Coefficient of Determination
Median
Mode
47.) When calculating the confidence interval, why is the sample standard deviation used to derive the standard error of the mean?
The coefficient of variation is unknown
The population standard deviation is not generally known
Other methods of central tendency are not reliable
The sample mean is used to derive the significance level
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48.) How do you apply the decrement factor if you find that the contractor appears to have overestimated the proposal price? |
[Identify the process for using stratified sampling] |
[Remediation Accessed: N] |
Multiply the decrement factor by the total cost of all sampled items
Increase the government objective by the decrement factor
Decrease the government objective by the decrement factor
Divide the decrement factor from all sampled items
49.) Given the following data, calculate the sample median. Sample data: 17, 16, 17, 16, 17, 18, 18
17
16
17.5
18
50.) Which of the following would be a proper method of determining the reasonableness of a contractor’s proposed labor hour estimate?
Use a stratified sampling techniques to evaluate contractor’s labor hour estimate
Decrement labor hours estimate according to DCAA standard decrement
Compare proposed hours with a Government should-cost estimate
Examine proposed hours on other contracts from the same contractor
51.) Which of these situations warrants the use of a round-table estimate?
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.
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.
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52.) Identify the primary issue you should consider when analyzing direct labor categories in a contractor’s proposal. |
[Identify proposed direct labor mix] |
[Remediation Accessed: N] |
Is the proposed skill mix reasonable for the work required?
Does the contractor compensate their employees for unpaid overtime?
Is the proposed skill mix identical to the independent government estimate?
Does the contractor currently employ workers in all proposed labor categories?
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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 description
Position class
Direct labor position
Position classification plan
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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 description
Position class
Direct labor position
Position classification plan
55.) For which of the following procurements would you require certified cost or pricing data?
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An offer of $800,000 for an item from the only known source of an electronic system unique to
Government requirements
An offer of $525,000 for a catalog-priced commercial item
A single-source offer for $96,000 for Research and Development
A commercial item contract modification which indicates that $398,000 of work will be removed by modification and $390,000 of work will be added.
Part 3
1.) Which of the following is an indirect cost pool?
Assembly labor
Direct material
Manufacturing labor
General and Administrative Expenses
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2.) Identify the formula for calculating indirect cost rates. |
[Identify the process of calculating indirect cost rates] |
[Remediation Accessed: N] |
Allocation Base multiplied by Expense Pool
Overhead Rate multiplied by Allocation Base
Allocation Base divided by Expense Pool
Expense Pool divided by Allocation Base
3.) Which regression method assumes a linear relationship between the dependent and independent variables?
Segmented regression
Local regression
Curvilinear regression
Simple linear regression
4.) Which situation below would you use improvement curve analysis to evaluate proposed costs?
Fully automated assembly line
Production facility specializing in “one-off” or unique item production
Fabrication plant that generates 100,000 units per month
Assembly line with high proportion of manual labor
5.) Which of the following is a factor that affects profit/fee calculations?
Magnitude of the contract in dollars
Distribution of equipment percentage
Profit/fee percentage historically paid to contractor
Contract type
6.) When is the working capital adjustment used while calculating profit/fee?
On all fixed price contracts
On all fixed price contracts with financing
On all fixed price contracts with performance based payments
On all fixed price contracts with progress payments
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Indirect costs with are unallowable
Directly associated costs which are allowable
Indirect costs which will be allocated on the basis of benefits received
Directly associated costs and are also unallowable
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9.) 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] |
[Remediation Accessed: N] |
There is no argument as the proposed costs are clearly allowable
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
Irrefutable proof of actual costs shall be accepted by the Government as reasonable
10.) Which of the following is required in the contractor’s proposal when Cost or Pricing Data are required?
Basis for establishing proposed profit or fee
Forecasts for any planned facility capital improvements
Data showing that adequate price competition for acquisitions exceeding the TINA threshold was
obtained
Documentation of agreed to procedures for validating each basis of estimate
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11.) The two cost accounting systems that are used [Identify the two [Remediation by a contractor manufacturing a number of commonly used Accessed: N] specifically identifiable physical units and whose systems for cost accounting] |
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Standard Deviation
Relative dispersion
Coefficient of variation
Absolute dispersion
15.) Identify the first step in conducting stratified sampling.
Identify items for 100% analysis
Develop the decrement factor
Group like items together
Randomly select a sample size equal to 20% of the total number of items
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Fabrication
Engineering
Quality Control
Assembly
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18.) Which one of the choices below is the correct definition of other direct costs? |
[Identify types of other direct costs] |
[Remediation Accessed: N] |
Costs that will benefit the proposed contract as well as other contracts currently in progress
Costs that can be identified with a specific contract and which the offeror does not treat as a direct
material cost or a direct labor cost
Costs that have already been charged as direct material costs and direct labor costs for the same
task
Costs that can be identified with a specific contract and which the offeror treats as a direct
material cost but not a direct labor cost
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.
|
1.) Identify the formula for calculating indirect cost rates. |
[Identify the process of calculating indirect cost rates] |
[Remediation Accessed: N] |
Overhead Rate multiplied by Allocation Base
Expense Pool divided by Allocation Base
Allocation Base multiplied by Expense Pool
Allocation Base divided by Expense Pool
2.) Which of the following situations would require a Disclosure Statement?
Contractor receives a contract valued at $7.5M or greater
Contractor receives a CAS covered contract or a subcontract valued at $50M in a cost accounting period
Anytime a sole-source contract is awarded
Anytime a cost reimbursement contract is awarded
3.) A cost is allowable if it is:
Established, disclosed and allocated
Consistent, uniform, and reasonable
Reasonable, allocable and compliant with CAS/GAAP
According to the terms and conditions of the contract, compliant with CAS/GAAP and certified to be accurate, current and complete
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4.) 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] |
Evaluating the conditions surrounding the procurement. In cases of National Emergency or
Contingency, any cost within 50% of the IGE is considered reasonable
Performing a quantitative analysis of the proposed cost using multivariate regression
Ensuring the proposed cost is no more than 25% greater than the last known procurement of the item
Comparing with other competitive proposals received in response to the solicitation
5.) Which inventory pricing method is being used when a company recalculates inventory prices every time a new item is added to the inventory?
Weighted Average
Last In/First Out (LIFO)
Moving Average
Standard Cost
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Assembly
Engineering
Quality Control
Fabrication
8.) Which one of the choices below is the correct definition of other direct costs?
Costs that have already been charged as direct material costs and direct labor costs for the same task
Costs that can be identified with a specific contract and which the offeror does not treat as a direct
material cost or a direct labor cost
Costs that will benefit the proposed contract as well as other contracts currently in progress
Costs that can be identified with a specific contract and which the offeror treats as a direct
material cost but not a direct labor cost
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.
1.) Identify the formula for calculating indirect cost rates.
Allocation Base multiplied by Expense Pool
Expense Pool divided by Allocation Base
Overhead Rate multiplied by Allocation Base
Allocation Base divided by Expense Pool
2.) Identify the primary issue you should consider when analyzing direct labor categories in a contractor’s proposal.
- Is the proposed skill mix identical to the independent government estimate?
- Does the contractor compensate their employees for unpaid overtime?
- Is the proposed skill mix reasonable for the work required?
- Does the contractor currently employ workers in all proposed labor categories?
3.) Which of the following is a grouping of all positions that share the same title and pay
- Position description
- Position class
- Direct labor position
- Position classification plan
CLC 056 Analyzing Contract Costs Exam
Answers to these questions can be downloaded below
1. Which of the following situations are considered exempt from the submission of Certified Cost or Pricing Data?
· 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
2. When given a set of data that appears to contain outliers, which measure of central tendency is most appropriate to use?
· Median
· Coefficient of Determination
· Mean
· Mode
3. What is an important driver to a successful negotiation?
· Listen to understand
· Ensure your position is heard
· Maintain position of power
· Obtain the lowest price for the government
4. Which of the following would be a proper method of determining the reasonableness of a contractor’s proposed labor hour estimate?
· Compare proposed hours with a Government should-cost estimate
· Compare proposed hours with all 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
5. Which of the following situations would exempt a contract or subcontract from 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
6. True or False: “Direct labor positions” share the same titles and pay levels.
· True
· False
7. Which situation below would you use improvement curve analysis to evaluating proposed costs?
· Assembly line with high proportion of manual labor
· Fabrication plant that generates 100,000 units per month
· Production facility specializing in “one-off” or unique item production
· Fully automated assembly line
8. Using a direct comparison with the cost of a similar contract effort is an acceptable summary
estimating technique
· True
· False
9. Identify 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?"
· The modification of any sealed bid or negotiated contract
· The award of any negotiated contract (except for undefinitized actions such as letter contracts)
· All of these are correct
· The award of a subcontractor at any tier, if the contractor and each higher-tier subcontractor have been required to furnish certified cost or pricing data
10. Which sampling technique is used to focus on high-value items?
· Stratified
· Random
· Cluster
· Nonprobability
11. Which of the following is an effective use of stratified sampling?
· 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
12. Which of the following is a phase in the allocation cycle?
· Interim Processing Phase
· Adjustment on Rates Phase
· Final Allocation Phase
· Continuous Rate Application Phase
13. The purpose of an audit is to:
· All of these are correct
· Determine if the data is accurate and complete
· Verify transaction legality
· Determine the degree of compliance with established procedures
14. How may you request an audit?
· All of these are correct
· By telephone call
· By mail
· By e-mail
15. Which of the following is the best strategy 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
16. What is the first step in conducting improvement curve analysis?
· Determine the Theoretical value of the unit #1
· Calculate the slope of the curve
· Collect the historical data
· Calculate the rate of improvement
17. The cost accounting systems that are used by a contractor manufacturing a number of identical units for multiple customers are:
· Generally Accepted Accounting Practice
· Cost Accounting Standards
· Process Cost System
· Job Order Accounting
18. Identify when cost analysis would be required.
· When certified cost or pricing data are required
· For all proposals exceeding the micropurchase threshold
· To evaluate profit or fee
· When certified cost or pricing data are required
19. Identify the primary issue you should consider when analyzing direct labor categories in a contractor's proposal.
· Is the proposed skill mix identical to the independent government estimate?
· Does the contractor compensate their employees for unpaid overtime?
· Is the proposed skill mix reasonable for the work required?
· Does the contractor currently employ workers in all proposed labor categories?
20. Which of the following is statements is true concerning profit/tree caluclations?
· 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
21. True or False: Simple linear regression is most appropriate when there is more than one independent variable..
· True
· False
22. Which three elements are necessary for calculating a confidence interval?
· Sample mean, t-value, standard error of the mean
· Mean, median, and mode
· Variance, t-value, sample mean
· Sample mean, median, and mode
23. Which of the following factors is critical to successful negotiation?
· Avoid being too friendly, in case the negotiations get diffuclt
· The negotiation should be competitive
· Set your opening positon extremely low to give room to negotiate
· Effectively prepare, plan and communicate
24. Which of the following labor classifications most likely involves fashioning parts from raw materials or purchased materials?
· Fabrication
· Quality Control
· Assembly
· Engineering
25. Which of the following is the preferred method for determining if a proposed 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
26. Each Price Negotiation Memorandum must contain which of the following?
· 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
27. What two costs elements are required to calculate an indirect cost rate?
· Expense pool and Allocation base
· Overhead rate and Expense base
· Allocation Pool and Expense base
· Allocation base and Overhead rate
28. Identify the situation where you would use simple linear regression.
· Direct cost analysis
· Labor classification analysis
· Facilities Capital Cost of Money calculation
· Profit objective calculation
29. What is the most common base for calculating the General and Administrative (G&A)
overhead rate?
· Total of all costs
· Total management cost
· Other direct costs
· Total price
30. True or False: A contractor estimates labor rates using weighted averages. As a contacting officer, you are NOT required to consider any labor-management agreement when developing your labor rate objective.
· True
· False
31. 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?
· Win-Win
· Win-Lose
· Lose-Lose
· Win-Lose-Win
32. A Disclosure Statement ? Contractor receives a CAS covered contract or a subcontract valued at $60M in a cost accounting period
· True
· False
33. When is it most appropriate to document or model a contractor’s 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
34. Which of the following situations would you most likely employ linear regression techniques?
· Estimating the cost of a new armored vehicle based on historical costs of similar procurements
· Analyzing the accuracy of a should-cost analysis generated by a DCMA Industrial
Engineer
· Calculating the mean cost of one individual unit in a production run of 10,000 units
· Comparing the proposed costs of a new computer database with the historical costs of all recentcontracts in your office
35. When calculating profile/fee, how is the “performance risk (composite)” calculated?
· By adding the assigned weight and assigned value of the technical and management/cost control elements and dividing the sum by 2
· By adding the assigned weights and assigned values of the technical and
management/cost control elements
· By multiplying the assigned weight and assigned value of the technical and management/cost control elements, and adding the two together
· By multiplying the assigned values of the technical and management/cost controls
elements
36. For which of the following procurements would you require certified cost or pricing data?
· An offer of $2.1 million for an item from the only known source of an electronic system unique to Government requirements.
· A single-source offer for $96,000 for Research and Development
· A commercial item contract modification which indicates that $398,000 of work will be removed by the modification and $390,000 of work will be added. Even after the
modification, the item
· An offer of $525,000 for a catalog-priced commercial item
37. When the Contracting Officer has relied on certified cost or pricing data in the price determination, which of the following statements is true?
· 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
38. 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
· 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
39. 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?
· Total costs
· Subtotal of costs
· Total price
· Direct and Indirect costs
40. When is it most appropriate to document or model a contractor’s proposal?
· When the value, importance, and complexity warrant the modeling
· When analyzing multiple commercial supply proposals
· Anytime you award a competitive contract
· Whenever there are values in excess of $1M included in the proposal
41. A cost is allowable if it is:
· 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
42. Which of the following is a factor used in calculating the Facilities Capital Cost of Money
(FCCOM) amount
· Division-wide allocation base amounts
· Industry-wide allocation base amounts
· Proposal allocation base amounts
· Percentage of land, building, and profit distributions
43. Identify the correct definition of “Cost Analysis”.
· The review and evaluation of individual cost elements and proposed profit/fee in and offeror's proposal
· Independent review of vendor quotes, long term agreements, and overhead costs in a proposal
· Analysis of “should cost” estimates compared to proposed costs
· Factual, not judgmental, and verifiable details of a cost proposal
44. The moving average inventory pricing method is being used when a company recalculates inventory prices every time that a new item is added to inventory.
· True
· False
45. Given the following data, calculate the sample median. Sample data: 17, 16, 17, 16, 17, 18,
18
· 17.5
· 17
· 18
· 16
46. Select the item below that would likely be categorized as a Indirect Material cost.
· Marketing cost for the sale of a particular item
· Frames that are fabricated for each individual unit
· Washers and seals used in the assembly process for all of the manufacturer’s products
· The purchase of 104 motor assemblies needed to manufacture vehicles
47. 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%
· 108
· 12
· 16
· 144
48. When a contract is subject to CAS, the Contracting Officer may not award a contract until a written adequacy determination has been made by the
Cognizant Federal Agency Official
· True
· False
49. 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?
· 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
50. Identify the response below that correctly describes the term "Data other than certified cost or pricing data".
· 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
negotiationssignificantly 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 overallproposed price appears to be fair and reasonable
· Pricing data, cost data, and judgmental information that is not certified and therefore cannot be reliedupon to determine a fair and reasonable price
51. Which of the following type of costs would most likely be categorized as both direct costs and indirect costs, depending on the circumstance?
· Travel Expense
· Utilities
· Direct Material
· G&A Overhead
52. A “questioned cost” is one that has not yet been evaluated.
· True
· False
53. The first step when conducting stratified sampling is to identify the population of items to be sampled.
· True
· False
54. Which variable is also considered the independent variable?
- X
- Z
- R
- Y
55. 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?
- 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.
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