CDFM Cost and Economic Analysis 4

Question 1

In DoD economic analysis, 'constant-year dollars' are used primarily to:

Accepted Answer

Remove the effects of inflation so costs can be compared across years

Answer

Include inflation forecasts for budget requests

Answer

Convert foreign currency expenditures to US dollars

Answer

Represent then-year budget authority

Question 2

A contractor's overhead rate is 120% applied to direct labor. If direct labor is $500,000, what is the total overhead charge?

Accepted Answer

$600,000

Answer

$120,000

Answer

$500,000

Answer

$1,100,000

Question 3

Which document establishes the analytical framework and ground rules for conducting a DoD economic analysis supporting a major investment decision?

Accepted Answer

Analysis of Alternatives (AoA) Study Plan

Answer

Contract Data Requirements List (CDRL)

Answer

Program Protection Plan (PPP)

Answer

Acquisition Strategy (AS)

Question 4

Learning curve theory predicts that as cumulative production doubles, unit costs decrease by a fixed percentage. A 90% learning curve on a $1,000 first-unit cost means the second unit costs:

Accepted Answer

$900

Answer

$800

Answer

$950

Answer

$1,000

Question 5

The primary difference between a cost-effectiveness analysis and a cost-benefit analysis in a defense context is:

Accepted Answer

Cost-benefit monetizes all benefits; cost-effectiveness measures outcomes in non-monetary units

Answer

Cost-effectiveness uses real dollars; cost-benefit uses nominal dollars

Answer

Cost-effectiveness is used only for R&D programs; cost-benefit for O&S

Answer

Cost-benefit analysis is required by law; cost-effectiveness is optional

Question 6

Risk-adjusted cost estimates in DoD programs typically add cost reserves based on:

Accepted Answer

Probabilistic analysis of cost driver uncertainties (e.g., Monte Carlo simulation)

Answer

Contractor profit history from previous contracts

Answer

Congressional markup history over the past five years

Answer

The difference between the high and low bids

Question 7

A program's total ownership cost (TOC) includes all of the following EXCEPT:

Accepted Answer

Competitor program development costs

Answer

Research and development costs

Answer

Production and deployment costs

Answer

Operations and support costs