Practice Test Geeks(FAC) Federal Acquisition Certification Practice Test
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Financial Analysis & Valuation Flashcards

7 cards from real FAC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. Which cost element is classified as a 'direct cost' under FAR Part 31?

    Answer: Cost of materials specifically purchased for a contract

    Direct costs are those that can be identified specifically with a contract, such as materials purchased exclusively for that contract.

  2. In a should-cost analysis, the primary objective is to:

    Answer: Determine what a contract should cost assuming efficient performance

    Should-cost analysis evaluates contractor efficiency and economy to estimate what a contract should cost under efficient performance conditions.

  3. The Economic Price Adjustment (EPA) clause in a contract is primarily designed to:

    Answer: Protect both parties from economic uncertainties over long performance periods

    EPA clauses allocate the risk of economic changes (inflation, material cost fluctuations) between the government and contractor over extended contract periods.

  4. Under FAR 31.201-4, a cost is allocable to a government contract if it:

    Answer: Benefits the contract, helps produce the contract's deliverable, or is necessary for overall operation

    Allocability requires that a cost benefits the contract, is necessary to produce the contract deliverable, or is required for overall business operations supporting the contract.

  5. A contractor's forward pricing rate agreement (FPRA) is used to:

    Answer: Pre-negotiate indirect cost rates for use in future contract pricing

    An FPRA establishes agreed-upon indirect cost rates applicable to future contracts, reducing the need to negotiate rates on each new award.

  6. When evaluating a contractor's proposed labor rates, a cost analyst should compare them against:

    Answer: Bureau of Labor Statistics data, the contractor's historical payroll records, and collective bargaining agreements

    A thorough labor rate analysis cross-references BLS data, the contractor's actual payroll history, and any applicable union agreements to assess reasonableness.

  7. The term 'unallowable cost' in government contracting means the cost:

    Answer: Cannot be included in any contract price or billed to the government

    Unallowable costs are specifically excluded by FAR Part 31 from being charged to government contracts or included in contract prices.