CON 3990V FINAL EXAM 2026 | Advanced Contract
Pricing & Proposal Analysis | All 200 Possible Questions |
DAU 100% Correct | Pass Guaranteed - A+ Graded
SECTION 1: COST PRINCIPLES & ALLOWABILITY (FAR PART 31)
(Q1-35)
Q1. A contractor proposes $50,000 in lobbying expenses related to a proposed
contract modification. Under FAR Part 31, how should the contracting officer treat
these costs?
A. Allow as a direct cost since they are necessary to secure the modification
B. Allow as an indirect cost allocable to all contracts
C. Disallow as an unallowable cost under FAR 31.205-22
D. Allow only if the lobbying is conducted by in-house personnel
Correct Answer: C. Disallow as an unallowable cost under FAR 31.205-22 [CORRECT]
Rationale: FAR 31.205-22 explicitly makes lobbying costs unallowable. This includes
attempts to influence legislation or executive branch officials regarding legislation or
policy. Options A and B incorrectly suggest allowability, while D creates a false
distinction—lobbying is unallowable regardless of who performs it.
Q2. Which of the following costs is generally ALLOWABLE under FAR Part 31 cost
principles?
A. Interest expense on borrowed capital
B. Charitable contributions exceeding $100 per recipient
C. Depreciation on contractor-owned equipment used for government work
D. Entertainment expenses for client relationship building
Correct Answer: C. Depreciation on contractor-owned equipment used for
government work [CORRECT]
,Rationale: Depreciation is an allowable cost under FAR 31.205-11 when computed in
accordance with generally accepted accounting principles. Interest (A) is unallowable
per FAR 31.205-20, charitable contributions (B) are unallowable per FAR 31.205-8,
and entertainment (D) is unallowable per FAR 31.205-14.
Q3. Under the 2026 NDAA update, the Truthful Cost or Pricing Data Act (TINA)
threshold for certified cost or pricing data increases to what amount for contracts
entered into after June 30, 2026?
A. $2.0 million
B. $2.5 million
C. $7.5 million
D. $10.0 million
Correct Answer: D. $10.0 million [CORRECT]
Rationale: Section 1804 of the FY 2026 NDAA raises the TINA threshold from $2
million (previously $2.5 million after October 2025 inflation adjustment) to $10
million for contracts entered into after June 30, 2026. This is a major 2026 update
that eliminates the common DAU exam error of using the old $2M threshold.
Q4. A contractor allocates home office expenses to its divisions using a base of total
cost input. A government auditor determines this method does not result in
equitable allocation. Which FAR principle is primarily at issue?
A. Cost reasonableness
B. Cost allocability
C. Cost allowability
D. Cost accounting standards compliance
Correct Answer: B. Cost allocability [CORRECT]
Rationale: FAR 31.201-4 requires that a cost be allocable to a contract if it is incurred
specifically for the contract or benefits both the contract and other work in
,reasonable proportion. The issue here is whether the allocation base produces an
equitable distribution, which is the allocability test. While CAS (D) may also apply, the
core FAR 31 principle is allocability.
Q5. Which three tests must ALL be met for a cost to be allowable under FAR 31.201-
2?
A. Reasonableness, allocability, and compliance with CAS
B. Reasonableness, allocability, and compliance with FAR Part 31 standards
C. Necessity, efficiency, and compliance with GAAP
D. Materiality, traceability, and consistency
Correct Answer: B. Reasonableness, allocability, and compliance with FAR Part 31
standards [CORRECT]
Rationale: FAR 31.201-2 establishes the three-part test: (1) reasonableness, (2)
allocability, and (3) compliance with standards promulgated in FAR Part 31 (or CAS if
applicable). CAS compliance (A) is only required when CAS applies, not universally.
Options C and D describe fabricated criteria.
Q6. A contractor proposes $75,000 in advertising costs to promote its commercial
products that are also sold to the government. Under FAR 31.205-1, which statement
is correct?
A. All advertising costs are unallowable
B. Advertising costs are allowable only if they promote specific government contracts
C. Advertising costs for commercial products are generally allowable
D. Advertising costs require CAS Disclosure Statement approval
Correct Answer: C. Advertising costs for commercial products are generally
allowable [CORRECT]
Rationale: FAR 31.205-1 distinguishes between advertising for commercial products
(generally allowable) and advertising directed toward government markets
, (unallowable). The key is the primary market being promoted. Option A is too broad,
B reverses the standard, and D introduces a non-existent CAS requirement.
Q7. Under FAR 31.205-6, compensation costs are subject to which limitation?
A. They must not exceed the median compensation for similar positions in the
industry
B. They must be reasonable for the work performed and not exceed statutory
executive compensation limits
C. They are limited to 150% of the federal civilian employee equivalent salary
D. They must be approved by the Defense Contract Management Agency (DCMA)
Correct Answer: B. They must be reasonable for the work performed and not exceed
statutory executive compensation limits [CORRECT]
Rationale: FAR 31.205-6 requires compensation to be reasonable for the work
performed, and additional statutory caps apply to executive compensation under 10
U.S.C. 2324. There is no fixed percentage cap (C) or DCMA pre-approval requirement
(D). The median comparison (A) is a factor but not the legal standard.
Q8. A contractor incurs $200,000 in legal fees defending against a government
allegation of defective pricing. How should these costs be treated under FAR Part 31?
A. Allowable as a necessary business expense
B. Unallowable because they relate to defective pricing
C. Allowable only if the contractor prevails in the dispute
D. Unallowable because they relate to a government proceeding
Correct Answer: B. Unallowable because they relate to defective pricing [CORRECT]
Rationale: FAR 31.205-47 makes costs related to defective pricing proceedings
unallowable. This includes legal fees, consultant fees, and other costs incurred in
defending against or resolving allegations of defective certified cost or pricing data.
The outcome of the proceeding (C) does not change the unallowability.
Pricing & Proposal Analysis | All 200 Possible Questions |
DAU 100% Correct | Pass Guaranteed - A+ Graded
SECTION 1: COST PRINCIPLES & ALLOWABILITY (FAR PART 31)
(Q1-35)
Q1. A contractor proposes $50,000 in lobbying expenses related to a proposed
contract modification. Under FAR Part 31, how should the contracting officer treat
these costs?
A. Allow as a direct cost since they are necessary to secure the modification
B. Allow as an indirect cost allocable to all contracts
C. Disallow as an unallowable cost under FAR 31.205-22
D. Allow only if the lobbying is conducted by in-house personnel
Correct Answer: C. Disallow as an unallowable cost under FAR 31.205-22 [CORRECT]
Rationale: FAR 31.205-22 explicitly makes lobbying costs unallowable. This includes
attempts to influence legislation or executive branch officials regarding legislation or
policy. Options A and B incorrectly suggest allowability, while D creates a false
distinction—lobbying is unallowable regardless of who performs it.
Q2. Which of the following costs is generally ALLOWABLE under FAR Part 31 cost
principles?
A. Interest expense on borrowed capital
B. Charitable contributions exceeding $100 per recipient
C. Depreciation on contractor-owned equipment used for government work
D. Entertainment expenses for client relationship building
Correct Answer: C. Depreciation on contractor-owned equipment used for
government work [CORRECT]
,Rationale: Depreciation is an allowable cost under FAR 31.205-11 when computed in
accordance with generally accepted accounting principles. Interest (A) is unallowable
per FAR 31.205-20, charitable contributions (B) are unallowable per FAR 31.205-8,
and entertainment (D) is unallowable per FAR 31.205-14.
Q3. Under the 2026 NDAA update, the Truthful Cost or Pricing Data Act (TINA)
threshold for certified cost or pricing data increases to what amount for contracts
entered into after June 30, 2026?
A. $2.0 million
B. $2.5 million
C. $7.5 million
D. $10.0 million
Correct Answer: D. $10.0 million [CORRECT]
Rationale: Section 1804 of the FY 2026 NDAA raises the TINA threshold from $2
million (previously $2.5 million after October 2025 inflation adjustment) to $10
million for contracts entered into after June 30, 2026. This is a major 2026 update
that eliminates the common DAU exam error of using the old $2M threshold.
Q4. A contractor allocates home office expenses to its divisions using a base of total
cost input. A government auditor determines this method does not result in
equitable allocation. Which FAR principle is primarily at issue?
A. Cost reasonableness
B. Cost allocability
C. Cost allowability
D. Cost accounting standards compliance
Correct Answer: B. Cost allocability [CORRECT]
Rationale: FAR 31.201-4 requires that a cost be allocable to a contract if it is incurred
specifically for the contract or benefits both the contract and other work in
,reasonable proportion. The issue here is whether the allocation base produces an
equitable distribution, which is the allocability test. While CAS (D) may also apply, the
core FAR 31 principle is allocability.
Q5. Which three tests must ALL be met for a cost to be allowable under FAR 31.201-
2?
A. Reasonableness, allocability, and compliance with CAS
B. Reasonableness, allocability, and compliance with FAR Part 31 standards
C. Necessity, efficiency, and compliance with GAAP
D. Materiality, traceability, and consistency
Correct Answer: B. Reasonableness, allocability, and compliance with FAR Part 31
standards [CORRECT]
Rationale: FAR 31.201-2 establishes the three-part test: (1) reasonableness, (2)
allocability, and (3) compliance with standards promulgated in FAR Part 31 (or CAS if
applicable). CAS compliance (A) is only required when CAS applies, not universally.
Options C and D describe fabricated criteria.
Q6. A contractor proposes $75,000 in advertising costs to promote its commercial
products that are also sold to the government. Under FAR 31.205-1, which statement
is correct?
A. All advertising costs are unallowable
B. Advertising costs are allowable only if they promote specific government contracts
C. Advertising costs for commercial products are generally allowable
D. Advertising costs require CAS Disclosure Statement approval
Correct Answer: C. Advertising costs for commercial products are generally
allowable [CORRECT]
Rationale: FAR 31.205-1 distinguishes between advertising for commercial products
(generally allowable) and advertising directed toward government markets
, (unallowable). The key is the primary market being promoted. Option A is too broad,
B reverses the standard, and D introduces a non-existent CAS requirement.
Q7. Under FAR 31.205-6, compensation costs are subject to which limitation?
A. They must not exceed the median compensation for similar positions in the
industry
B. They must be reasonable for the work performed and not exceed statutory
executive compensation limits
C. They are limited to 150% of the federal civilian employee equivalent salary
D. They must be approved by the Defense Contract Management Agency (DCMA)
Correct Answer: B. They must be reasonable for the work performed and not exceed
statutory executive compensation limits [CORRECT]
Rationale: FAR 31.205-6 requires compensation to be reasonable for the work
performed, and additional statutory caps apply to executive compensation under 10
U.S.C. 2324. There is no fixed percentage cap (C) or DCMA pre-approval requirement
(D). The median comparison (A) is a factor but not the legal standard.
Q8. A contractor incurs $200,000 in legal fees defending against a government
allegation of defective pricing. How should these costs be treated under FAR Part 31?
A. Allowable as a necessary business expense
B. Unallowable because they relate to defective pricing
C. Allowable only if the contractor prevails in the dispute
D. Unallowable because they relate to a government proceeding
Correct Answer: B. Unallowable because they relate to defective pricing [CORRECT]
Rationale: FAR 31.205-47 makes costs related to defective pricing proceedings
unallowable. This includes legal fees, consultant fees, and other costs incurred in
defending against or resolving allegations of defective certified cost or pricing data.
The outcome of the proceeding (C) does not change the unallowability.
