CLC 056 Exam 1 Practice Questions

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