CLC 056 (7 sets for the final exams)

Analyzing Contract Costs Exam

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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

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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

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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

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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 prenegotiation 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]

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