Cost and Price Analysis Flashcards

Which of the following best describes a 'make-or-buy' analysis?

Answer: An analysis determining whether to produce items in-house or procure them from subcontractors

A make-or-buy program (FAR 15.407-2) requires contractors to analyze whether manufacturing or performing work internally is more cost-effective than subcontracting.

Catalog price analysis is most appropriate when:

Answer: A vendor offers standard commercial items at published prices available to the general public

When a product has a published catalog price sold commercially, that price can be used as a basis for price reasonableness without requiring detailed cost data.

The concept of 'cost realism' analysis is used in source selection to:

Answer: Verify that the offeror understands the work and can perform at the proposed cost

Cost realism analysis evaluates whether proposed costs are realistic for the work described, ensuring the offeror's technical and management approach is reflected in the proposed price.

G&A (General and Administrative) expenses are typically allocated to contracts using which base?

Answer: Total cost input or cost of sales

G&A costs are most commonly allocated using a total cost input base (all costs except G&A) or a cost of sales base, as these best represent the benefit received by all business activities.

Under TINA, 'cost or pricing data' is defined as all facts that:

Answer: A prudent buyer or seller would reasonably expect to significantly affect price negotiations

TINA's definition focuses on factual data — such as vendor quotes, labor rates, and usage rates — that a reasonable party would consider significant in negotiating price.

Which of the following is an example of a direct cost as defined under FAR 31.202?

Answer: Salary of an engineer working exclusively on a specific contract

A direct cost is one that can be identified specifically with a particular contract — an engineer dedicated to one contract is a textbook direct cost.