A cost analysis is defined as: A cost analysis is a process of analyzing each individual cost element that makes up the final price. These individual items can include but are not limited to direct and indirect labour, direct and indirect materials, tooling costs, overhead, equipment, General and Administrative expenses, and profits. A process of looking at a price and deciding if the price is fair and reasonable without looking at specific elements. Analyzing historical prices and increasing/decreasing the historical price based on inflation and volumes to determine if the price is reasonable. Comparing quotations received when competitively bidding items and prices from published lists from multiple vendors is a way to determine if prices are fair and reasonable. Page 3 of 10