CDFM Cost and Economic Analysis 5

Question 1

In defense acquisition, 'affordability' is best enforced through which mechanism at Milestone A?

Accepted Answer

Establishing an Affordability Cap tied to the program's budget allocation

Answer

Lowest Price Technically Acceptable (LPTA) source selection

Answer

Requiring cost-plus contracts to limit contractor fees

Answer

Conducting a should-cost review after contract award

Question 2

Which of the following best defines 'economic life' in the context of a defense economic analysis?

Accepted Answer

The period during which an asset provides benefits that justify its continued operation over replacement

Answer

The contractor's depreciation schedule for equipment

Answer

The number of years remaining on a fixed-price contract

Answer

The statutory useful life defined in the Federal Acquisition Regulation

Question 3

A break-even analysis in defense resource management determines the point at which:

Accepted Answer

The cumulative benefit of a new system equals the cumulative cost of transition from the legacy system

Answer

Total revenue equals total contract profit

Answer

Overhead rates balance between fixed and variable costs

Answer

The contractor's fee offsets all incurred costs

Question 4

The primary purpose of a Nunn-McCurdy breach notification is to:

Accepted Answer

Alert Congress when a program's unit cost growth exceeds statutory thresholds

Answer

Notify the contractor of a stop-work order due to cost overruns

Answer

Initiate an ICE after a program completes Milestone C

Answer

Require renegotiation of the contract profit rate

Question 5

In an EVM-integrated cost estimate, the Estimate at Completion (EAC) using the CPI efficiency factor is calculated as:

Accepted Answer

BAC / CPI

Answer

BAC + (BAC – EV)

Answer

AC + (BAC – EV) / CPI

Answer

EV / AC × BAC

Question 6

Which technique is specifically designed to identify the value of design options by determining the minimum benefit required to justify an additional cost increment?

Accepted Answer

Marginal analysis (incremental cost-benefit)

Answer

Monte Carlo simulation

Answer

Regression analysis

Answer

Net Present Value ranking

Question 7

Under DoD guidance, a cost estimate is considered 'credible' when it:

Accepted Answer

Addresses risk and uncertainty, documents assumptions, and is cross-checked against independent data

Answer

Matches the contractor's proposed price within 5 percent

Answer

Is approved by the program's contracting officer before Milestone B

Answer

Uses only parametric methods validated by CAPE