PRICING PROBLEM

This pricing problem has been designed to permit application of a wide$-$range of price$/$cost

analysis techniques. These include use of such tools as:

$$ Learning curves

$$ Trend analysis, including index numbers

$$ Overhead analysis

$$ Profit analysis

$$ Judgment

Required:

Your job is to develop a prenegotiation position for all cost elements with explanations.

Available information includes program information, a cost proposal, DCAS and DCAA

reports, and an ASD Cost Research Report.

There is no one right answer. You should strive for a Fair and Reasonable objective. Grades

will be based both on what you considered and how and why you considered it$.$

Table of Contents

Program Information....... $....................................................................................................2$

C$.$ost Proposal $......................................................................................................................6$

DCAS and DCAA Reports $.................................................................................................20-27$

Cost Research Report. $.........................................................................................................35$

PROGRAM INFORMATION

Program History

$1.$ In July $19$X$5$ a requirement for a very small, very reliable, lightweight

radio receiver transmitter$/$receiver for use in a new aircraft,

the A$-8$ became known. The aircraft was, at this time, in prototype

production and units of the new receiver transmitter were necessary

prior to flight test scheduled for July $19$X$7.$

$2.$ Due to the lack of acquisition leadtime it was necessary to select

on a single source basis, a contractor with t$.$~e necessary technical

bac::kq$\%0$Wld to provide the equipment. Radiotronics, Inc was, after

careful analysis, chosen to develop and produce the RT$/$ARC $1984$ receiver

transmitter unit.

$3.$ The RT$/$ARC $1984$ has proven to be extremely effective and reliable

and has been repurchased four times from Radiotronics to meet the needs

of the Air Force.

CONTRACT DATA

Contract Target

Lot $\text{'}!$Voe Price Actual Price

$.,..$ CT'IF $$1,450,000$ $$1,500,000$

$2$ CPI? $3,000,0002,660,000$

$3$ F$?$IF $3,250,0003,270,000$

$4$ FPIF $4,700,0004,720,000$

$5$ FPIF $3,900,000$ Unknown

$6($Proposed$)$ FFP $5,233,404$

$2$