Sample Exam Questions

1. Estimating a program's costs on the basis of the known costs of a similar program is known as:

a. Parametric Estimating
b. Grass Roots Estimating
c. Estimating by analogy
d. Making an Engineering Estimate

2. A locus of points showing the different combinations of two outputs that can be obtained for a specific cost is termed an:

a. Equant Curve
b. Cost Progress Curve
c. Isoquant Curve
d. Isocost Curve

3. A proposed contract requires four types of labor. The amount of each type that is required, and the associated labor rates, are:
 

What should be the total composite labor rate for the contract?

a. $11.00      b. $11.50     c. $9.90     d. $10.16

4. Find the point (x,y) that is common to the two lines

x - y = 12
3x + 4y = 8

a. (0,6)
b. (20,8)
c. (8,-4)
d. (4/3,1)

5. The unit theory or Wright learning curve (cost improvement curve) models the decrease in unit production costs as the total       quantity produced increases. Which of the following is not true:

a. Costs must be measured in constant dollars or in labor hours to avoid distortion by inflation
b. Costs decline by a constant multiple when total quantity is doubled
c. It is possible to forecast future costs given past lot costs and quantities
d. Costs decline by a fixed amount when total quantity is doubled

6. Assuming a mix of 40% labor and 60% material, escalate $1000 for 3 years at 5% labor escalation and 10% material escalation. The escalated value is closest to:

a. $1080
b. $1167
c. $1227
d. $1262

7. An analyst is told that a supplier uses a 20% profit margin. If the total bid to the customer is $20,000, the profit is:

a. $4000
b. $3333
c. $1667
d. $3667

8. A prime contract is best described as:

a. a "choice'' or desirable contract
b. a highly profitable contract
c. a direct contract with the procurring organization
d. an opportunity to be a subcontractor
 

9. A savings and loan association advertises an 8% rate of interest compounded quarterly. What is the effective annual rate of interest the S&L is paying?

a. 8%
b. 2%
c. 8.24%
d. 32%
 

10. Direct Cost is usually:

a. classified as overhead
b. identified specifically with an objective
c. distributed to contracts against a base
d. an item of cost incurred for joint usage

Practical Knowledge Examination - Sample Questions and Correct Answers

1. You are to prepare a bid for making 100 machined plates. The plates will be made in lots of 50. The estimated shear time is 0.3 hours for set up and 25 per hour will be the production rate (run time). The machine time is estimated at 0.2 hours with 2.0 hours set-up time. The shear requires two men to set up and operate. The machining will be done on an NC machine with one operator. The NC tape will cost $250 and is to be written off against the 100 plates. The material is estimated to cost $21.25 per plate. The direct labor rate is $12.50 per hour for fabrication (shearing) and $14.50 per hour for machining. The labor overhead rate is 150%. Administrative costs are 5% of material, labor and overhead. A 10% profit rate is considered reasonable. What should be the selling price for the 100 plates?

a. $4080
b. $3500
c. $4000
d. $2450

2. Which of the following is NOT usually considered a fixed cost?

a. property taxes
b. depreciation
c. materials
d. security

3. Productivity and labor rates on a software development project were observed to be
 

Assuming the same productivity and labor rates, how much will it cost to complete a 3-year software development project of 10,000 lines of code, if 50% is completed in year 2 and 25% is completed in each of years 1 and 3?

a. $2,000,000
b. $2,112,452
c. $1,122,500
d. $4,500,000
 

4. Division A of a firm operates on a 92% unit-theory (Wright) cost progress curve, and Division B operates on a 95% curve. If the cost division's unit costs are equal at unit 128 and Division A starts at a first unit cost of 6000 hours, what is Division B's first unit cost?

a. 6000 hours
b. 5000 hours
c. 2563 hours
d. 4793 hours
 

5. The following table gives information on costs of five software development projects. Assume that all projects are essentially alike, and that all were done in similar environments. Use simple linear regression to make a model to estimate the cost of a project of similar type, done in a similar environment.
 

What is the estimated cost of the 200-line project?

a. $2133
b. $1000
c. $1463
d. none of the above
 

6. The time-to-failure of a type of electronic component is a random variable whose probability distribution function p(x) is given by:

p(x) = 3000 x^-4, x >10;
p(x) = 0, x < 10

where x is time in hours. What is the component's expected failure time:

a. 10 hours
b. 15 hours
c. 20 hours
d. none of the above
 

7. Your company has recently purchased 100 of item X at a total cost of $500, 75 of item Y at a cost of $600, and 80 of item Z for $480. You are trying to determine the cost of a proposed system that uses parts of a similar nature. The new system will provide twice as much performance as the existing one (a functional complexity of 2.0). Item X has a material complexity of 1.60 and is a one user in the new system. Two of item Y are required and the exact part is used. Three of item Z are necessary, but the proposed part is only half as complex (material cost) as original item Z. There is no purchase quantity discount or penalty. A 20% scrap factor is expected on the new parts that are similar to X and Z. Assume no scrap factor on part Y. You are expected to estimate the cost for 5 new systems. What is your estimated cost?

a. $364
b. $218
c. $182
d. $165

8. A cost plus incentive fee contract has a target cost of $1,200,000. It has a target fee of $120,000. The share ratio is 70/30 and there is a ceiling of 15%. If the cost was overrun by 5%, what fee would the contractor receive?

a. $120,000
b. $114,000
c. $102,000
d. $78,000