Acme Corporation has received a contractual order to build a new tooling machine for Alpha Corporation. The project started several months ago. Table 15–14 is the Monthly Cost Summary for June, 2002. Some of the entries in the table have been purposely omitted, but the following additional information is provided to help you answer the questions below:
A. Assume that the overhead of 100% is fixed over the period of performance.
B. The report you are given is at a month end, June 30, 2002.
C. The 80/20 sharing ratio says that the customer (i.e., Alpha) will pay 80 percent of the dollars above the target cost and up to the ceiling cost. Likewise, 80 percent of the cost savings below the target cost go back to Alpha.
D. The revised BCWS is revised from the released BCWS.
E. The ceiling price is based on cost (i.e., without profit).
Answer the following questions by extracting data from the Alpha Machine Tool Project’s monthly summary report.
1. What is the total negotiated target value of the contract? _________________________
2. What is the budgeted target value for all work authorized under this contract? _________________________
3. What is the total budgetary amount that Acme had originally allocated/released to the Alpha Project? _________________________
4. What is the new/revised total budgetary amount that Acme has released to the Alpha Project? _________________________
5. How much money, if any, had Acme set aside as a management reserve based upon the original released budget? (burdened) _________________________
6. Has the management reserve been revised, and if so, by how much? (burdened) _________________________
7. Which level-2 WBS elements make up the revised management reserve? _________________________
8. Based upon the reviewed BCWS completion costs, how much profit can Acme expect to make on the Alpha Project? _________________________
9. How much of the distributed budget that has been identified for accomplishment of work is only indirectly attributed to this contract? (i.e., overhead) _________________________ Answer the Following Questions for Direct Labor Only
10. Of the total direct effort budgeted for on this contract, how much work did Acme schedule to be performed this month? _________________________
11. How much of the work scheduled for accomplishment this month was actually earned (i.e., earned value)? _________________________
12. Did Acme do more or less work than planned for this month? How much was the schedule variance (SV)? [$ and %] _________________________
13. What did it actually cost Acme for the work performed this month? _________________________
14. What is the difference between the amount that Acme budgeted for the work performed this month and what the actual cost was? (i.e., CV) [$ and %] _________________________
15. Which WBS level-2 elements are the primary causes for this month’s cost and schedule variances? _________________________
16. How much cost variance has Acme experienced to date? [$ and %] _________________________
17. How much schedule variance has Acme experienced to date? [$ and %] _________________________
18. Is the cost variance improving or getting worse?
19. Is the schedule variance improving or getting worse? _________________________
20. Does it appear that the scheduled end date will be met? _________________________
21. What is the new estimated burdened cost at completion? _________________________
22. How much profitability/loss can Acme expect from the new estimated cost at completion? _________________________
23. If Acme’s final burdened cost for the program was $3,150,000, how much profit/loss would it experience? _________________________