CON 170 Student Exercises Table of Contents
CON 170
Fundamentals of Cost and Price
AnalysisStudent Exercises/All CON
170 Student Exercises
Table of Contents
Lesson 03 Contract Types ..........................................................................................1
Lesson 04 Contract Financing .................................................................................13
Lesson 05 Cost or Pricing Data................................................................................23
Lesson 06 Defective Pricing ....................................................................................31
Lesson 07 Cost Accounting Standards ....................................................................41
Lesson 08 Differences Between Cost and Price Analysis .......................................51
Lesson 09 Price Analysis Techniques......................................................................61
Lesson 10 Price Related Factors ..............................................................................71
Lesson 11 Quantitative Methods and Price Analysis Scenarios ..............................79
Lesson 12 Price Analysis Capstone .......................................................................139
Lesson 13 Cost Principles ......................................................................................143
Lesson 14 Cost Analysis Process, Players, and Business System .........................155
Lesson 15 Direct Costs ..........................................................................................157
Lesson 16 Indirect Costs ........................................................................................161
Lesson 17 Facilities Capital Cost of Money ..........................................................177
Lesson 18 Weighted Guidelines ............................................................................183
Lesson 19 Cost Analysis Capstone Exercise .........................................................189
BMRA i CON 170
,CON 170 Student Exercises Table of Contents
This page intentionally left blank.
BMRA ii CON 170
, Lesson 03 Exercises
Contract Types
Table of Contents
Fixed Price Economic Price Adjustment ........................................................................................ 2
In-Class Review .............................................................................................................................. 3
CPFF Contract Knowledge Check .................................................................................................. 5
FPIF and FPIS Contract Knowledge Check ................................................................................... 7
Check for Understanding – Comparison between FPI(F) and CPIF .............................................. 8
Contracting Strategy ....................................................................................................................... 9
Scenario One ............................................................................................................................... 9
Scenario Two .............................................................................................................................. 9
Scenario Three .......................................................................................................................... 10
Scenario Four ............................................................................................................................ 10
Scenario Five ............................................................................................................................ 10
Scenario Six .............................................................................................................................. 11
Scenario Seven .......................................................................................................................... 11
Scenario Eight ........................................................................................................................... 11
BMRA, Inc. Rev. 20-350 1 CON 170
, Lesson 3 Exercises Contract Types
Fixed Price Economic Price Adjustment
The 3-year contract states that price adjustments will be made using the Producer Price Index
(PPI) for silver, NAICS Code 21222. The index is to be checked at the end of year 1 and end of
year 2 for potential adjustment. The maximum increase or decrease over the life of the contract is
10% of the original contract price.
The EPA clause states that 25% of the contract line item price is subject to adjustment. The
unadjusted contract line item price is $200,000 per unit. The PPI base index as of the date of
award of the contract is 178. At the end of year 1, the new index is 230.
Calculate the adjusted price at the end of year 1.
Step 1. Identify the index(es) which will be used in making adjustments.
Old Index = 178
New index = 230
Step 2. Identify the base period and times or events that will trigger price adjustments.
Base Period = 1 year
Trigger event = year 2
Step 3. Identify the percentage of the base price subject to adjustment.
25% of base price is subject to EPA
Step 4. Identify any limits on adjustment.
limit of adjustment over life of contract = 10 % of original contract price or $220,000 max; $180,000 min
Step 5. Calculate the adjusted price.
$214,607
Also see CPRG Volume 4, Chapter 1.2.1 - Establishing Terms and Conditions for Economic
Price Adjustments.
BMRA 2 CON 170
CON 170
Fundamentals of Cost and Price
AnalysisStudent Exercises/All CON
170 Student Exercises
Table of Contents
Lesson 03 Contract Types ..........................................................................................1
Lesson 04 Contract Financing .................................................................................13
Lesson 05 Cost or Pricing Data................................................................................23
Lesson 06 Defective Pricing ....................................................................................31
Lesson 07 Cost Accounting Standards ....................................................................41
Lesson 08 Differences Between Cost and Price Analysis .......................................51
Lesson 09 Price Analysis Techniques......................................................................61
Lesson 10 Price Related Factors ..............................................................................71
Lesson 11 Quantitative Methods and Price Analysis Scenarios ..............................79
Lesson 12 Price Analysis Capstone .......................................................................139
Lesson 13 Cost Principles ......................................................................................143
Lesson 14 Cost Analysis Process, Players, and Business System .........................155
Lesson 15 Direct Costs ..........................................................................................157
Lesson 16 Indirect Costs ........................................................................................161
Lesson 17 Facilities Capital Cost of Money ..........................................................177
Lesson 18 Weighted Guidelines ............................................................................183
Lesson 19 Cost Analysis Capstone Exercise .........................................................189
BMRA i CON 170
,CON 170 Student Exercises Table of Contents
This page intentionally left blank.
BMRA ii CON 170
, Lesson 03 Exercises
Contract Types
Table of Contents
Fixed Price Economic Price Adjustment ........................................................................................ 2
In-Class Review .............................................................................................................................. 3
CPFF Contract Knowledge Check .................................................................................................. 5
FPIF and FPIS Contract Knowledge Check ................................................................................... 7
Check for Understanding – Comparison between FPI(F) and CPIF .............................................. 8
Contracting Strategy ....................................................................................................................... 9
Scenario One ............................................................................................................................... 9
Scenario Two .............................................................................................................................. 9
Scenario Three .......................................................................................................................... 10
Scenario Four ............................................................................................................................ 10
Scenario Five ............................................................................................................................ 10
Scenario Six .............................................................................................................................. 11
Scenario Seven .......................................................................................................................... 11
Scenario Eight ........................................................................................................................... 11
BMRA, Inc. Rev. 20-350 1 CON 170
, Lesson 3 Exercises Contract Types
Fixed Price Economic Price Adjustment
The 3-year contract states that price adjustments will be made using the Producer Price Index
(PPI) for silver, NAICS Code 21222. The index is to be checked at the end of year 1 and end of
year 2 for potential adjustment. The maximum increase or decrease over the life of the contract is
10% of the original contract price.
The EPA clause states that 25% of the contract line item price is subject to adjustment. The
unadjusted contract line item price is $200,000 per unit. The PPI base index as of the date of
award of the contract is 178. At the end of year 1, the new index is 230.
Calculate the adjusted price at the end of year 1.
Step 1. Identify the index(es) which will be used in making adjustments.
Old Index = 178
New index = 230
Step 2. Identify the base period and times or events that will trigger price adjustments.
Base Period = 1 year
Trigger event = year 2
Step 3. Identify the percentage of the base price subject to adjustment.
25% of base price is subject to EPA
Step 4. Identify any limits on adjustment.
limit of adjustment over life of contract = 10 % of original contract price or $220,000 max; $180,000 min
Step 5. Calculate the adjusted price.
$214,607
Also see CPRG Volume 4, Chapter 1.2.1 - Establishing Terms and Conditions for Economic
Price Adjustments.
BMRA 2 CON 170
