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Cost and Economic Analysis

This area deals with the financial manager's knowledge of mathematical and statistical methods, cost estimating techniques, benefit analysis (including payback, return on investment and present value), system acquisition and life cycle management policies, including analysis of hardware.
  
This core competency examines your knowledge in assembling and organizing data, statistical methods, and cost estimating techniques. You will need to demonstrate knowledge of the various methods of determining the return on investment – such as pay-back period and present value.
  
Cost and economic analysis techniques are used in the acquisition of major weapons systems. Therefore, you should be able to demonstrate a working knowledge of the terminology surrounding various measures of acquisition cost such as procurement cost and life cycle cost. In addition, you should be able to differentiate between, and select the best techniques for, estimates of hardware and software systems.
  
Cost and economic analysis concepts and principles are frequently used in the analysis and solution of installation management problems. Therefore, you should have a working knowledge of Activity Based Costing and standard installation costing models.
  
Primary references for this area are collegiate texts on statistical and economical analysis techniques, DoD 5400.4M, Defense and Service cost estimating manual and procedures.
  
  Test Study Preparation References
  
 Title Author  Publisher  Ed  Chap/Sec  Study Notes
 Statistical Techniques in Business and Economics  Mason & Lind  Times Mirror Ed. Group, Van Hoffman Press  9th, 1996  Pg 120  ISBN 0-256-13901-6
DoD 5000.4M Cost Analysis Guidance and Procedures        Chap 2  http://www.dtic.mil/whs/directives
DoD 5000.2R Mandatory Procedures for MDAPS and MAIS Acquisition Prog.        Chap 4  http://www.dtic.mil/whs/directives
 US Army Cost Manual        Chap 4 http://www.ceac.army.mil/ce/default.asp
 Cost Accounting Traditions and Innovations  Barfield, Raiborn, Kinney  West Publications  1994    
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