Question 1

The target cost is the best-case scenario for the buyer.

Accepted Answer

A) True 
 B)False

Question 2

Common types of FFP contracts are: firm fixed price,fixed price with economic price adjustment and fixed price redetermination.

Accepted Answer

A) True 
 B)False

Question 3

Under a CPIF arrangement,an incentive applies over part of the range of cost outcomes.The fee structure resembles a cost plus fixed fee contract at both the low-cost and high-cost ends of the range.

Accepted Answer

A) True 
 B)False

Question 4

Cost Plus Incentive Fee arrangements combine the incentive arrangement and the cost plus fixed fee arrangement.

Accepted Answer

A) True 
 B)False

Question 5

The target profit is an amount considered fair and reasonable by both parties.

Accepted Answer

A) True 
 B)False

Question 6

Which is not one of considerations in assessing technical risk as presented in the textbook?"

Accepted Answer

A)  Type and complexity of the item or service 
B)  Supply and demand patterns of the marketplace 
C)  Stability of design specifications or statement of work 
D)  Availability of historical pricing data 
E)  Prior production experience 
A)  Type and complexity of the item or service 
B)  Supply and demand patterns of the marketplace 
C)  Stability of design specifications or statement of work 
D)  Availability of historical pricing data 
E)  Prior production experience

Question 7

The compensation arrangement determines:

Accepted Answer

A)  Degree and timing of the cost responsibility assumed by the supplier 
B)  Amount of profit or fee available to the supplier 
C)  Capability of the supplier with respect to quality 
D)  Motivational implications of the fee portion of the compensation arrangements 
A)  Degree and timing of the cost responsibility assumed by the supplier 
B)  Amount of profit or fee available to the supplier 
C)  Capability of the supplier with respect to quality 
D)  Motivational implications of the fee portion of the compensation arrangements

Question 8

Under a CPIF arrangement,an incentive applies over the entire range of cost outcomes.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not a cost type arrangement?

Accepted Answer

A)  Cost reimbursement 
B)  Cost plus hidden charges 
C)  Cost plus fixed fee 
D)  Cost plus award fee 
E)  Cost without fee 
A)  Cost reimbursement 
B)  Cost plus hidden charges 
C)  Cost plus fixed fee 
D)  Cost plus award fee 
E)  Cost without fee

Question 10

FPEPA contracts are used to recognize hidden cost contingencies,such as poor quality or late delivery.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not true with respect to fixed price redetermination contracts (FPR)?

Accepted Answer

A)  A FFP is set for an initial period of the contract 
B)  A redetermination (upward or downward) occurs at a stated time during the contract 
C)  FPR prospective almost always occurs at the middle point in time of the contract 
D)  FPR prospective is used where a fair and reasonable price can be developed for initial periods but not subsequent periods 
E)  FPR Retroactive is used when uncertainty exists as in the prospective, but the amount of the contract is small and/or the performance period is short 
A)  A FFP is set for an initial period of the contract 
B)  A redetermination (upward or downward) occurs at a stated time during the contract 
C)  FPR prospective almost always occurs at the middle point in time of the contract 
D)  FPR prospective is used where a fair and reasonable price can be developed for initial periods but not subsequent periods 
E)  FPR Retroactive is used when uncertainty exists as in the prospective, but the amount of the contract is small and/or the performance period is short

Question 12

Contract schedule risk is the risk associated with material and labor cost increases and possible schedule slippages.

Accepted Answer

A) True 
 B)False

Question 13

Common types of FFP contracts are: firm fixed price,fixed price with economic price adjustment and fixed price redemption.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is not true about incentive arrangements in contracts?

Accepted Answer

A)  Used to motivate the supplier to control costs 
B)  Used to encourage good supplier performance 
C)  Contract price will usually be lower 
D)  Ceiling price is usually fixed during negotiations 
E)  Cost responsibility is usually shared 
A)  Used to motivate the supplier to control costs 
B)  Used to encourage good supplier performance 
C)  Contract price will usually be lower 
D)  Ceiling price is usually fixed during negotiations 
E)  Cost responsibility is usually shared

Question 15

A firm fixed price (FFP)contract is an agreement to pay a price that varies depending on when the items (services)specified by the contract have been delivered (completed)and accepted.

Accepted Answer

A) True 
 B)False

The target cost is the best-case scenario for the buyer.

Common types of FFP contracts are: firm fixed price,fixed price with economic price adjustment and fixed price redetermination.

Under a CPIF arrangement,an incentive applies over part of the range of cost outcomes.The fee structure resembles a cost plus fixed fee contract at both the low-cost and high-cost ends of the range.

Cost Plus Incentive Fee arrangements combine the incentive arrangement and the cost plus fixed fee arrangement.

The target profit is an amount considered fair and reasonable by both parties.

Which is not one of considerations in assessing technical risk as presented in the textbook?"

The compensation arrangement determines:

Under a CPIF arrangement,an incentive applies over the entire range of cost outcomes.

Which of the following is not a cost type arrangement?

FPEPA contracts are used to recognize hidden cost contingencies,such as poor quality or late delivery.

Which of the following is not true with respect to fixed price redetermination contracts (FPR)?

Contract schedule risk is the risk associated with material and labor cost increases and possible schedule slippages.

Common types of FFP contracts are: firm fixed price,fixed price with economic price adjustment and fixed price redemption.

Which of the following statements is not true about incentive arrangements in contracts?

A firm fixed price (FFP)contract is an agreement to pay a price that varies depending on when the items (services)specified by the contract have been delivered (completed)and accepted.

The Progression to Professional Supply Management

Organizational Issues

Supply Management: an Organization Spanning Activity

A Portfolio of Relationships

New Product Development

Purchasing Descriptions and Specifications

Managing for Quality

The Procurement of Equipment

Purchasing Services

Outsourcing

Sourcing

Global Supply Management

Total Cost of Ownership

Price and Cost Analysis

Negotiation

Contract Formation and Legal Issues

Contact and Relationship Management

Ethics and Social Responsibilities

Production and Inventory Control

Demand Management and Logistics

Implementing Value Network Management

Filters

Exam 15: Methods of Compensation

The target cost is the best-case scenario for the buyer.

Common types of FFP contracts are: firm fixed price,fixed price with economic price adjustment and fixed price redetermination.

Under a CPIF arrangement,an incentive applies over part of the range of cost outcomes.The fee structure resembles a cost plus fixed fee contract at both the low-cost and high-cost ends of the range.

Cost Plus Incentive Fee arrangements combine the incentive arrangement and the cost plus fixed fee arrangement.

The target profit is an amount considered fair and reasonable by both parties.

Which is not one of considerations in assessing technical risk as presented in the textbook?"

The compensation arrangement determines:

Under a CPIF arrangement,an incentive applies over the entire range of cost outcomes.

Which of the following is not a cost type arrangement?

FPEPA contracts are used to recognize hidden cost contingencies,such as poor quality or late delivery.

Which of the following is not true with respect to fixed price redetermination contracts (FPR)?

Contract schedule risk is the risk associated with material and labor cost increases and possible schedule slippages.

Common types of FFP contracts are: firm fixed price,fixed price with economic price adjustment and fixed price redemption.

Which of the following statements is not true about incentive arrangements in contracts?

A firm fixed price (FFP)contract is an agreement to pay a price that varies depending on when the items (services)specified by the contract have been delivered (completed)and accepted.

The Progression to Professional Supply Management

Organizational Issues

Supply Management: an Organization Spanning Activity

A Portfolio of Relationships

New Product Development

Purchasing Descriptions and Specifications

Managing for Quality

The Procurement of Equipment

Purchasing Services

Outsourcing

Sourcing

Global Supply Management

Total Cost of Ownership

Price and Cost Analysis

Negotiation

Contract Formation and Legal Issues

Contact and Relationship Management

Ethics and Social Responsibilities

Production and Inventory Control

Demand Management and Logistics

Implementing Value Network Management

Filters