Ace the 2026 FAC-C Exam - Contracting Champs, Get Certified and Conquer!

The primary focus in determining the allocability of costs in contracting is on incurred costs for a single cost objective. Allocability refers to the extent to which a cost can be assigned to a particular contract or project. For costs to be deemed allocable, they must be both reasonable and necessary for the performance of the contract. This means that the costs should be directly linked to the activities being funded by the contract and must be incurred specifically to benefit that particular cost objective.

When evaluating costs for a single cost objective, it's essential to ensure that each cost is justified by its relation to the performance of the contract. This criterion prevents misallocation of costs among different projects or funding sources, thereby ensuring transparency and accountability in the use of federal funds. In doing so, it also aligns with compliance regulations and ensures that only allowable costs are charged to the government.

The other choices do not align with the core principle of what makes a cost allocable. Relevance of income generated does not address the allocation of costs but rather focuses on revenue. Projected future expenses are not considered when determining allocability, as cost allocation is based on costs that have already been incurred. Lastly, comparing competing bids pertains to procurement strategies rather than the specific principles governing cost allocability.