CDFM Cost and Economic Analysis 2

Question 1

In a DoD cost-benefit analysis, which discount rate is typically mandated for use when evaluating long-term investments?

Accepted Answer

The Office of Management and Budget (OMB) Circular A-94 real discount rate

Answer

The contractor's weighted average cost of capital

Answer

The Federal Reserve prime lending rate

Answer

The inflation rate plus 2 percent

Question 2

Which type of cost estimate is prepared early in the acquisition cycle and is based primarily on parametric techniques and historical analogies?

Accepted Answer

Order of Magnitude Estimate

Answer

Engineering Build-Up Estimate

Answer

Definitive Estimate

Answer

Contractor Cost Data Report Estimate

Question 3

The Cost as an Independent Variable (CAIV) concept in DoD acquisition primarily aims to:

Accepted Answer

Set an affordability cap and drive design trade-offs to meet it

Answer

Eliminate all cost growth after Milestone B

Answer

Transfer cost risk entirely to the prime contractor

Answer

Require fixed-price contracts for all major programs

Question 4

A program office compares two aircraft engines: Engine A costs $2M with a 10,000-hour life; Engine B costs $1.4M with a 7,000-hour life. Using cost per flight hour, which engine is more economical?

Accepted Answer

Engine A at $200/hour

Answer

Engine B at $200/hour

Answer

Engine A at $250/hour

Answer

Engine B at $220/hour

Question 5

Which WBS element captures all contractor costs not attributable to specific program tasks, such as executive salaries and building rent?

Accepted Answer

General and Administrative (G&A) Overhead

Answer

Direct Materials

Answer

Other Direct Costs (ODC)

Answer

Fee and Profit

Question 6

When comparing two alternatives with different useful lives, the most appropriate economic analysis technique is:

Accepted Answer

Equivalent Annual Cost (Annualized Cost) method

Answer

Simple payback period analysis

Answer

Net Present Value without adjustment

Answer

Gross cost summation

Question 7

In DoD parametric cost estimating, a Cost Estimating Relationship (CER) is best described as:

Accepted Answer

A statistical equation relating cost to one or more technical or physical parameters

Answer

A negotiated contract clause linking cost to performance milestones

Answer

A government-furnished cost database for prime contractors

Answer

A compliance checklist for EVM reporting