Answer to Question #210442 in Microeconomics for Smith

Question

1. Explain the various classification structures for an agency’s cost estimation and give a specific example of each.

2.Explain the five types of budget authority.    

Answer 1

1). Usually the cost estimating savvies classify the project cost into 3 elements including markup, direct cost and indirect cost. Linking factor between the models tends to be materials and labor comments. Overhead tends to be indirect as profits are considered in the profit classification.

2). The authority granted to federal agencies in the Appropriations Act to make financial commitments that result in immediate or future expenditures. The budget authorization is not necessarily the amount actually spent by the institution or department in a fiscal year, but only the upper limit of the number of new expenditure commitments it can make. The basic types of budget authority include contract, appropriation as well as borrowing authority.The time period for Congress to provide funding can be specified as one year, several years, or none. Available quantities can be classified as definite or uncertain; specific quantities or unspecified quantities can be provided. Authority can also be divided into permanent or current. Permanent power does not require any current action by Congress.