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

DoD policy requires programs to establish affordability caps at Milestone A that reflect what the Department can afford, driving requirements and design trade-offs.

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

Economic life ends when continuing to operate an asset costs more than replacing it, making replacement the economically rational choice.

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

Break-even analysis identifies when the savings or benefits from adopting a new system recoup its acquisition and transition costs relative to the incumbent system.

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

Nunn-McCurdy requires the DoD to notify Congress when a program's Program Acquisition Unit Cost or Average Procurement Unit Cost grows beyond 15% (significant) or 25% (critical) above the current baseline.

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

EAC = BAC ÷ CPI assumes the program will continue to perform at its current cost efficiency for all remaining work.

CDFM - Certified Defense Financial Manager Practice Test

CDFM - Certified Defense Financial Manager Practice Test

CDFM Cost and Economic Analysis 5