CDFM Budget and Cost Analysis 5

Question 1

Which cost element is classified as a direct cost in government contract cost accounting?

Accepted Answer

Engineering labor hours billed exclusively to one contract

Answer

A direct cost is any cost that can be specifically identified with a single cost objective (contract); labor hours billed exclusively to one contract are the classic example.

Question 2

What is the primary function of the Defense Contract Audit Agency (DCAA) in relation to cost analysis?

Accepted Answer

To audit contractor cost representations and accounting systems for adequacy and compliance

Answer

DCAA audits contractor accounting systems, incurred cost submissions, and cost proposals to ensure compliance with FAR/DFARS and to provide objective cost data to contracting officers.

Question 3

Under Cost Accounting Standard (CAS) 410, what must contractors do with G&A expenses?

Accepted Answer

Allocate them to cost objectives using a base that represents the total activity of the business unit

Answer

CAS 410 requires G&A expenses to be allocated using a base that represents the total business activity of the business unit, most commonly a total cost input base.

Question 4

What does 'then-year dollars' (TY$) mean in a DoD cost estimate?

Accepted Answer

Dollars that include inflation projected to the actual year of expenditure

Answer

Then-year (or current) dollars include inflation escalation to the year in which costs will actually be incurred, reflecting the actual dollars that will need to be appropriated and spent.

Question 5

In DoD budget formulation, what is the role of a Program Element (PE) number?

Accepted Answer

It is the DoD accounting code that links resources to a specific program or mission area in the FYDP

Answer

A Program Element (PE) is the basic building block of the DoD program structure, uniquely identifying a specific program, mission, or activity within the FYDP and linking funding to purpose.

CDFM - Certified Defense Financial Manager Practice Test

CDFM - Certified Defense Financial Manager Practice Test

CDFM Budget and Cost Analysis 5