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.
Read the first 7 Financial Analysis & Valuation flashcards as text
The primary purpose of a Disclosure Statement required under CAS 9903.202 is to:
Answer: Describe the contractor's cost accounting practices so the government can evaluate consistency
A CAS Disclosure Statement documents the contractor's cost accounting practices, enabling the government to evaluate whether costs are accumulated and allocated consistently.
A contractor proposes to use the 'learning curve' in pricing labor costs. This technique accounts for the fact that:
Answer: Labor hours per unit decrease predictably as cumulative production doubles
The learning curve (or improvement curve) captures the phenomenon where labor hours per unit fall by a predictable percentage each time cumulative output doubles.
Which of the following would constitute 'defective pricing' under TINA?
Answer: A contractor knowingly withholding a vendor quote that showed lower material costs
Defective pricing occurs when a contractor fails to disclose accurate, complete, and current cost data — such as withholding a lower vendor quote that was available before price agreement.
Under EVMS, what does the 'Budget at Completion' (BAC) represent?
Answer: The total approved budget for all authorized contract work
BAC is the total planned value (sum of all planned budgets) for the entire scope of authorized contract work.
A contracting officer is evaluating two offers: one with a lower price but higher risk, and one with a higher price but lower risk. The appropriate tool for comparing these is a:
Answer: Cost-risk analysis or cost realism assessment
Cost realism analysis evaluates whether proposed costs are realistic for the work, helping the government compare offers that reflect different levels of performance risk.
FAR 31.205-46 limits allowable travel costs primarily by reference to:
Answer: The Federal Travel Regulation (FTR) or Joint Travel Regulation (JTR) per diem rates
FAR 31.205-46 caps allowable lodging, meals, and incidental travel costs at the rates established in the FTR (civilian agencies) or JTR (DoD).
When a contract includes both cost-reimbursable and fixed-price line items, the financial management approach is called:
Answer: Hybrid contract financing
A hybrid contract combines different contract types for different line items, requiring separate financial tracking and management approaches for each line item type.