CCNP Pricing Analysis 3

Question 1

What does the 'learning curve' concept predict about unit costs as cumulative production volume doubles?

Accepted Answer

Unit costs decrease by a fixed percentage

Answer

The learning curve theory holds that each time cumulative output doubles, unit labor cost falls by a consistent percentage (e.g., 80%).

Question 2

Price analysis differs from cost analysis primarily because price analysis:

Accepted Answer

Compares offered prices without examining underlying cost data

Answer

Price analysis evaluates reasonableness by comparing prices to market data or historical prices, without requiring cost breakdowns.

Question 3

Which of the following is an example of a 'price-related factor' in best-value source selection?

Accepted Answer

Life-cycle cost including maintenance and disposal

Answer

Life-cycle cost captures all ownership costs beyond the initial purchase price and is a price-related evaluation factor.

Question 4

In a time-and-materials (T&M) contract, the buyer's primary pricing risk is:

Accepted Answer

Unlimited cost growth if hours and materials are not monitored

Answer

T&M contracts provide the least cost control because the buyer pays for all hours worked plus materials, creating open-ended liability.

Question 5

A buyer negotiates a $1M firm-fixed-price contract. The supplier's actual cost turns out to be $700K. Who retains the $300K profit?

Accepted Answer

The supplier keeps all profit; the buyer bears no additional cost

Answer

Under FFP contracts, the supplier assumes all cost risk and retains all profit from underruns; the buyer pays the fixed price regardless.

(CCNP) Certified Contract Negotiation Professional Practice Test