Cost and Price Analysis

greet and Price Analysis Instructor pick out ClassFinance 230Date PeriodResults 1)Why is it important for the giving medication to exercise unspoilt fiscal judgment when spending funds? Government employees argon held answerable for use of good judgment so those excessive expenditures ar non paid. 2) inclination and describe four types of market based set. Be sure to deliver at least one (1) example of apiece type.Competitive Offers solution to compendium encouraging competing offers naturalized Catalog Price Published by the vendor in a regularly maintained catalog or price list completed Market Price substantiated from sources independent of the seller and are online sales prices established in the normal ply of trade between buyers and sellers free to bargain in the market place. Established by Law or Regulation customers are consistently force by the established prices. )List 3 reasons that governing body buyers have significant advantages in getting fair a nd sensitive prices. The government is the only buyer which has a strong negotiating position on pricing. High volume purchase suppliers wish well to deal with high volume buyers and are inclined to give ameliorate prices to such buyers. Anit-Deficiency Act requires the government agencies have the money to pay for the shoot work before signing the snub. 4) contrast and contrast embody, price and remuneration. Price refers to the descend of money that consumers have to give up to acquire goods or service. kale is what ever monetary amount is left after all address has been paid. 5)List and explain the two acceptable procedures for obtaining competitive prices. Sealed Bidding A bidding by which government needs are sacrifice cognise by a solicitation called and Invitation for Bids (IFB). Negotiation is the assure method that ma be employ when sealed bidding is inappropriate. Competitive Proposals A process by which government needs are made known by a solicitation called a Request for Quotation (RFQ) 6)Compare and contrast speak to and financial accounting.List two (2) examples each of conditions that warrant the use of bell and financial accounting procedures. Cost accounting is a procedure which enables firms to fall out track of the personifys that apply to each individual submit or major(ip) task they to a lower place take. Ex embody acct. estimate the exist of work before actually undertaking it. Financial accounting is the aggregation of information that enables the firm to know how much total live and cyberspace they made in a accompaniment period of time. Ex. 7)What are the leash major classifications of be?Reasonable, deductible, and allocable speak to Variable fixed, and semi-variable damage aim and in come in approach 8)Compare rate and indirect be. Direct cost direct labor, direct materials, and some diffe prosecutewise cost specifically associated with musical compositionicular contracts are classified as direct costs. Indirect cost are every cost that are not direct. Cost that apply across the posting to large parts not conveniently chargeable to one particular contract. How does the government contracting officer ensure the costs are reasonable, permissible and allocable?Reasonable Cost in its nature and amount, it does not authorise that which would be incurred by a prudent person in the distribute of a competitive business. Allowable Cost allowability of a particular cost under cost principles must be determine using cold Part 3. Each principle is based on laws and policies. The decision for determing allowable of a particular cost rest with the Contracting Officer. Allocable be alloacable if I is assignable or chargeable to one or much cost objectives on the basis of relative benefits received or former(a) sincere relationship. )When may certified cost or pricing information be ask? The head of an agency shall require offerors, contractors, and subcontractors to make cost or pricing info available as follows An offeror for a prime contract entered into using procedures other than sealed-bid procedures shall be demand to make up cost or pricing data before the award of a contract if in the case of a prime contract, the price of the contract to the is expect to go by $500,000 and in the case of a prime contract entered into on or before, the price of the contract to the United States is expected to travel by $100,000. n the case of a change or modification made to a prime contract referred to in subparagraph the price adjustment is expected to exceed $500,000 in the case of a change or modification, to a prime contract that was entered , the price adjustment is expected to exceed $500,000 and in the case of a change or modification not cover by clause (i) or (ii), the price adjustment is expected to exceed $100,000. 10)If the government were to determine that significant overpricing occurred because of defective cost or pricing data, what options may the contracting officer explore prior to award?What may the contracting officer retrieve after award? The Truth in Negoatation Act an examination of defective pricing in government contracting 11)Explain the level of importance associated with the detailed analysis of direct labor costs when determining a fixed-price contract. Price analysis shall be used when cost or pricing data are not required in determining the reasonableness of the prime contract price. Some firm-fixed-price contracts may have in mind substantially less cost risk than that of direct costs, such as material and labor, and associated indirect costs. 2)When determining proposed hourly wage rates, list third (3) options an offeror explore. Plantwide rate, Departmental Rate, and Rates by Labor Category 13)List, in comparison, what process improvements benefits realized from the learning curve and improvement curve. What are the expectations of each curve? Theroy called learning curve because i t is belived thath learning workers caused most of the time saving, Studies showed that other factors, such as equipment and set-up improvements, also help reduce unit mathematical product time.It is called various names improvement curve, experience curve and time drop-off curve. 14)How does a company effectively manage the command overhead expense? What are the typical expenses included in overhead? hit expenses are those output signal and nonproduction costs not readily traceable to specific jobs or processes. command processing overhead expenses encompass three general areas indirect materials, indirect labor, and all other miscellaneous production expenses, such as taxes, insurance, depreciation, supplies, utilities, and repairs.Therefore, overhead expense is part of the total costs of maintaining and staffing a business. 15)Categorize the following expenses as either Overhead or General & Administrative a. Lease b. Entertainment Expense c. go bad Expense d. Payroll Expen se e. Marketing Expense f. Mileage g. skipper Development h. Utilities i. Communications Expense j. Goodwill k. Research and Development cost l. Taxes m. Patent Costs n. Bad Debts o. Lobbying and other Political Costs 16)The glass allowance includes spoilage and shrinkage. List two (2) alike(p)ities and differences between the three categories. print allowance is extra amount of material or parts required to be sure that enough material will be avaible to make the final product. Scrap is unadvoidable. Spoilage is a different from scrape because it is the direct result of someone making a mistake or a machine getting out of adjustment or a similar problem. Shrinkage is another factor. This can be the result of nature. 17)Explain the following concepts a. Underabsorption under absorption is when the actual budgeted overhead is less than the planned overhead b. Overabsorption natural event of credit balance in factory-overhead account, resulting from excess of overhead applied to wo rk-in-process inventorying over the amount of overhead actually incurred. c. Exact Absorption The chances of enthralling the exact actual amount of overhead by a series of many customer billings throughout the year are nil. 18)Describe the following methods in conducting price analysis a. Comparison of proposed prices received in response to the solicitation These methods consist of comparing offered prices to each other to decide which are reasonable b.Comparison of prior proposed prices and contract prices with current proposed prices Method most ofttimes used for government price analysis when agency has had a story of contracting for the same products or services. c. Comparison with competitive published price lists Catalogs are recognized as fairly reliable guides on current prices being paid by consumers in general. Established catalog or market price. The price paid for commercial items prices for items sold in substantial. Established catalog price, Established market pr ice, and Price paid for Commercial items. . optic Analysis FAR 5. 404-1(b) (4) says value analysis can give brain wave into the relative worth of a product, and government may use it in conjunction with other price analysis techniques. 20)Facilities cost of capital is allowable if the contractors have which of the following (a) expectant investment is measured, allocated to contracts and cost as required by CAS 414 (b) Contractor has adequate records to show compliance with CAS 414 (c) Estimated facilities capital cost of money is specifically proposed for the contract under which it is claimed (d) All of the above 1) Compare and contrast Distributed Facilities and Undistributed Facilities. Distributed facilities are those that are clearly and directly assign to specific overhead or G accounts. Undistribute Facilities are facilities capital costs incurred for more than one indirect cost pool. The cost of these facilities must be allocated to the indirect cost pools that bebefit from them. 22) Facilities capital cost of money is an a. Allocatable cost b. Allowable cost c. Variable cost d. Imputed cost e. Both b and d 23).What does the acronym CASB mean in Facilities Capital Cost of Money a, Capital Accounting System Branch b. Cost Accounting Standards Board c. Cost Analysis Standards Board d. Both a & b 24) Which form is used to calculate the capital cost of money a. Form CASB-CMF b. DD 1861 c. SF 182 d. All of the above. 25) In which (1) one of the three ways can a contract meeter assist the contracting officer in contract pricing? Reviewing and evaluating proposed or incurred costs 26) Contracting Officers will often ascertain that the contractors accounting system meets this requirement by commissioning a ______________________?Pre-award visual modality of Prospective Contractor Accounting System ( PSPCAS) 27) Contract auditor is called on by a contracting officer to determine if the prospective contract meets what? Responsible financial capability sta ndard of FAR 9. 104-1 28) What unsupported costs are proposed or incurred costs on which the auditor is unable to commit an opinion? Regarding reasonable, allowability, or allocability. 29) What does the acronym DCAA mean? Defense contract Audit delegacy 30) What is the total Cost Approach? How is it used?It shows all cost incurred in the original contract estimate and were the attributes to the contract were changed. It shows the government at erroneous belief and recognizes that neither the contractor nor any third party is at fault. 31) List the two principles that prevail in measuring equitable adjustment. Some cost impact must result from the contract change The contract and government are to remain whole. 32) Why is there a format for submitting proposals for equitable adjustments and when is it used. This formal procedures is a methodical way o document the deliberateness of the equitable adjustment.When contractors submit certified cost or pricing data if the expected va lue of the contract modification exceeds $650,00. 00. 33) What is the name of the formula that is astray used when computing unabsorbed overhead resulting from government caused delays? Eichleay Formula 34) How can contractors segregate the cost of performing changed work? They usually assign specials accounting codes to the proceeding attributed to the changed work. 35) What is the main misconception about profit and hire? Negotiated profit or wages is what the contractor will actually get. 6) What three major requirements must government contracting officers adhere to according to the Contracting Officer Responsibilities (FAR 15. 404-4)? Profit fee Pre-negotiation objective, Facilities Capital Cost of Money, Statutory Limitations of Prices or Fees 37) Name six major factors bearing on profit levels for government contracts. Contractor Effort, Contract cost rack, Federal Socioeconomic programs, Capital Investments, Cost Control and other quondam(prenominal) Accomplishments, Ind ependent Development. 38) What is the general approach used by all the incorporated profit systems.The structured profit systems establish a total profit objective by adding profit increments for various major cost inputs and for other contract factors. 39) What are the major categories listed under the approach of Profit ending Overhead? High skill supervision, clerical and support, depreciation or rent (complex) depreciation or rent (routine), fringe benefits administrative, routine expense, and total overhead costs. 40) List three important factors that every business must consider before doing business with the government.