Economic Analysis and Life Cycle Costing Flashcards
6 cards from real ACAP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Economic Analysis and Life Cycle Costing flashcards as text
What is the 'Fully Burdened Cost of Fuel (FBCF)' in Army economic analysis?
Answer: The total cost of delivering a unit of fuel to the point of use in a combat theater, including transportation, logistics, force protection, and casualty costs
FBCF captures the true total cost of fuel in operational settings, far exceeding commodity price, and is used to evaluate the economic benefit of fuel-efficient system designs.
What is 'total ownership cost (TOC)' and how does it differ from LCC?
Answer: TOC includes all LCC elements plus indirect costs borne by the broader Army enterprise (e.g., infrastructure, training base support), whereas LCC typically covers only program-specific costs
TOC provides a broader view of ownership costs by including institutional overhead and enterprise-level support costs that may not appear in a program-specific LCC estimate.
Under AR 11-18, when is an economic analysis (EA) required for Army decisions?
Answer: When proposed actions involve acquiring, constructing, leasing, or retaining government assets or when comparing alternative courses of action with significant resource implications
AR 11-18 requires EAs across a broad range of Army resource decisions to ensure that alternatives are objectively compared on a life cycle cost and benefit basis before committing resources.
What is 'residual value' in Army life cycle costing?
Answer: The estimated salvage or reuse value of a system or its components at the end of service life, which can offset disposal costs in the LCC
Residual value represents what the government can recover through sale or reuse of a system after it is retired, reducing the net cost of ownership in the LCC.
What is the 'Army Procurement Appropriation' and how does it relate to life cycle costing?
Answer: It funds the production and initial fielding of Army systems, representing the procurement phase of the life cycle cost estimate
The Army Procurement Appropriation covers the purchase of major end items and associated fielding costs, corresponding to the production and deployment phase within the overall LCC structure.
What is the primary risk of focusing Army acquisition decisions only on procurement unit cost rather than total life cycle cost?
Answer: Systems optimized for low procurement cost often have higher O&S costs, resulting in greater total expenditure over the program's life
A cheap-to-buy system may be expensive to operate and maintain; evaluating total LCC prevents short-sighted decisions that minimize upfront cost while maximizing long-term expenditure.