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Pricing and Cost Accounting, 3rd Edition

Name: Pricing and Cost Accounting, 3rd Edition
Author: Darrell J. Oyer
ISBN: 9781567263541

by Darrell J. Oyer

April 2011

Intermediate to advanced

304 pages

11h 23m

English

Berrett-Koehler Publishers

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Cover
Title Page
Copyright
About the Author
Dedication
Acknowledgments
Table of Contents
Preface
Chapter 1. Federal Government Procurement Methods
Commercial ItemsSealed BidsContracting By NegotiationTimeliness—Sealed Bid and Competitive ProposalsEvaluation Process—Competitive ProposalsCommunications—Competitive ProposalsTruth in Negotiations—Competitive Cost-Type Proposals and All Non-Competitive Proposals
Chapter 2. Types of Government Contracts
Government Selection of Contract TypesFixed-Price ContractsFirm-Fixed-Price ContractFixed-Price-Incentive ContractIncentives ContractFirm-Fixed-Price with Economic Adjustment ContractFixed-Price Redeterminable ContractFirm-Fixed-Price Contract with Successive TargetsFixed-Price, Level-of-Effort ContractFixed-Price, Award-Fee ContractCost-Reimbursement ContractsCost-Sharing ContractCost-Reimbursement-Only ContractCost-Plus-Fixed-Fee ContractCost-Plus-Incentive-Fee ContractCost-Plus-Award-Fee ContractOther Contract TypesTime-and-Materials ContractLabor-Hour ContractIndefinite-Delivery ContractLetter ContractBasic AgreementBasic Ordering AgreementUnauthorized Contract Types and VariationsOther TransactionsContract Type and Potential Financial Reward

Chapter 3. Accounting System Requirements
Basic Record KeepingInternal Controls and Written Policies and ProceduresManaging Contract CostsAllocating CostsDirect and Indirect CostsOverhead CostsService CentersGeneral and Administrative CostsConsistent ApplicationEstablishing a Cost StructureMonitoring Indirect CostsOther Cost Accounting ConceptsCredits
Chapter 4. Cost Allowability
Origin of Government Contract Cost PrinciplesApplicability of Government Cost RegulationsFAR Concept of Total CostCreditsIncurred CostsAllowability of CostsReasonablenessAllocabilityContract Terms/Advance AgreementsIndirect Cost PoolsDirectly Associated CostCosmetically Low RatesSegregation of Unallowable Costs
Chapter 5. Principles—Selected Costs
Generally Unallowable CostsPublic Relations and Advertising Costs (31.205-1)Bad Debts (31.205-3)Contributions or Donations (31.205-8)Entertainment Costs (31.205-14)Fines, Penalties, and Mischarging Costs (31.205-15)Interest and Other Financial Costs (31.205-20)Lobbying and Political Activity Costs (31.205-22)Losses on Other Contracts (31.205-23)Organization Costs (31.205-27)Costs Related to Legal and Other Proceedings (31.205-47)Goodwill (31.205-49)Costs of Alcoholic Beverages (31.205-51)Asset Valuations Resulting from Business Combinations (31.205-52)Excessive Pass-Through Costs (31.203(i))Costs Related to Human ResourcesCompensation for Personal Services (31.205-6)Employee Stock Ownership Plans (ESOPs) (31.205-6(q))Employee Morale, Health, Welfare, Food Service, and Dormitory Costs and Credits (31.205-13)Professional and Consulting Costs (31.205-33)Recruitment Costs (31.205-34)Relocation Costs (31.205-35)Trade, Business, Technical and Professional Activity Costs (31.205-43)Training and Educational Costs (31.205-44)Travel Costs (31.205-46)Costs Related to Physical ResourcesCost of Money (31.205-10)Depreciation (31.205-11)Gains and Losses on Disposition of Depreciable Property or Other Assets (31.205-16)Idle Facilities and Idle Capacity Costs (31.205-17)Maintenance and Repair CostsManufacturing and Production Engineering Costs (31.205-25)Plant Reconversion Costs (31.205-31)Rental Costs (31.205-36)Special Tooling and Special Test Equipment Costs (31.205-40)New Business-Related CostsIndependent Research and Development and Bid and Proposal Costs (31.205-18)Selling Costs (31.205-38)Miscellaneous CostsContingencies (31.205-7)Economic Planning Costs (31.205-12)Insurance and Indemnification (31.205-19)Material Costs (31.205-26)Other Business Expenses (31.205-28)Patent Costs (31.205-30)Precontract Costs (31.205-32)Royalties and Other Costs for Use of Patents (31.205-37)Taxes (31.205-41)Termination Costs (31.205-42)Environmental Cleanup CostsRestructuring Costs (DFARS 231.205.70)Cost of Government Shutdowns
Chapter 6. Cost Accounting Standards
Original CAS LegislationBasics of Public Law 91-379CASB Operating PoliciesAfter The Demise of The Original CASBBasic CAS RequirementsPrice AdjustmentsCovered ContractsExempt ContractsWaivers of CAS CoverageCAS Steering Committee and Working GroupThe StandardsStandard 401: Consistency in Estimating, Accumulating, and Reporting CostsStandard 402: Consistency in Allocating Costs Incurred for the Same PurposesStandard 403: Allocation of Home Office Expenses to SegmentsStandard 404: Capitalization of Tangible AssetsStandard 405: Accounting for Unallowable CostsStandard 406: Cost Accounting PeriodStandard 407: Use of Standard Costs For Direct Material and Direct LaborStandard 408: Accounting for Costs of Compensated Personal AbsencesStandard 409: Depreciation of Tangible Capital AssetsStandard 410: Allocation of Business Unit General and Administrative Expenses to Final Cost ObjectivesStandard 411: Accounting for Acquisition Costs of MaterialsStandard 412: Composition and Measurement of Pension CostStandard 413: Adjustment and Allocation of Pension CostStandard 414: Cost of Money As an Element of the Cost of Facilities CapitalStandard 415: Accounting for the Cost of Deferred CompensationStandard 416: Accounting for Insurance CostsStandard 417: Cost of Money As an Element of the Cost of Capital Assets Under ConstructionStandard 418: Allocation of Direct and Indirect CostsStandard 420: Accounting for Independent Research And Development (IR&D) and Bid and Proposal (B&P) CostsDisclosure StatementDollar Threshold of Contract Awards For Determining Filing RequirementsRevisions to Disclosure StatementsExemptionsReview and Approval of Disclosure StatementDetailed Requirements of Disclosure Statement
Chapter 7. Developing Cost Estimates for Proposals
The Estimating ProcessQuantity EstimatesMake-or-Buy DecisionsDirect Labor CostsDirect Material CostsOther Direct CostsIndirect CostsIndirect Cost Estimating WorksheetSubmitting Price ProposalsGeneral InstructionsRequired Breakdowns
Chapter 8. Contract Price Negotiation and Profit Guidelines
Government vs. Commercial ProfitDepartment of Defense GuidelinesWeighted Guidelines MethodProfit Objective DeterminationValues: Normal and Designated RangesCost Efficiency FactorNASA GuidelinesOther Agencies’ Guidelines
Chapter 9. Truth in Negotiations
Applicability of The LawBasic CoverageCovered ContractsProhibitions on Obtaining Cost or Pricing DataAdequate Price CompetitionCommercial ItemsWaiversRequiring Information Other Than Cost or Pricing DataPrice ReductionsSpecial Subcontract ConsiderationsGovernment Burden of ProofCost or Pricing DataAvailable DataSubmission of DataReliancePrice IncreaseSetoffsThe Role of a Certificate
Chapter 10. Contract Administration
Responsibility for Contract Administration and AuditsContract Administration DutiesContract AuditsFinancial AspectsContract PaymentsProvisional or Interim Billing RatesFinal Indirect Cost RatesCost-Sharing Rates and Ceilings on Indirect Cost RatesForward-Pricing Rate AgreementsQuick-Closeout ProcedureDisallowing Costs After IncurrencePerformance AspectsSuspension of Work, Stop-Work Orders, and Government Delay of WorkPast Performance EvaluationsContract ModificationsSubcontractingGovernment PropertyEarned Value Management SystemsTermination for ConvenienceEthics
Chapter 11. Government Contract Audits
Accounting System ReviewBasic Record KeepingInternal Controls and Written Policies and ProceduresPayment RequestsLimitation of Cost ClauseEstimating System ReviewOrganizational RelationshipsReview RequirementsMake-or-Buy DecisionsUpdating Cost or Pricing DataDOD Estimating System RequirementsLabor Recording System AuditRisk AssessmentEmployee InterviewsAudit ReportProcurement System ReviewCompensation System AuditReasonableness of CompensationUncompensated OvertimePrice Proposal ReviewDeveloping Cost EstimatesAuditor ApproachesIncurred Cost AuditLabor CostsMaterial and Subcontract CostsIndirect CostsOther Direct CostsPostaward Review (Defective Pricing)Audit EmphasisApplicability of the Truth in Negotiations ActPrice ReductionFraud in Defective PricingAudit TechniquesCost Accounting StandardsDisclosure StatementChanges in Cost Accounting PracticesContract Termination AuditEquitable Contract Price Adjustment AuditFinancial Capability AuditOperations AuditMaterial Management And Accounting SystemDCAA Contract Audit Manual
Acronyms
Index

Content preview from Pricing and Cost Accounting, 3rd Edition

CHAPTER 5Principles—Selected Costs

Part 31 of the FAR states that costs shall be allowed to the extent that they are reasonable, allocable, and allowable under certain specific provisions. FAR Section 31.205 covers the allowability of 51 specific cost elements. This chapter focuses on those cost elements that involve complex ideas or are specific to government contracting, and are therefore most likely to need clarification.

GENERALLY UNALLOWABLE COSTS

The following categories of cost are generally unallowable under FAR 31.205.

Public Relations and Advertising Costs (31.205-1)

Generally, public relations and advertising costs relating to sales promotion are unallowable because the government procurement system generates sales through direct ...

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