Overhead allocation and marginal cost in U.S. and Brazilian Defense contracting

This thesis evaluates marginal analysis techniques as effective tools in cost analysis. Particular attention is paid to overhead cost, and how this cost category affects those companies that will be contracting with the Brazilian Air Force without competitive procurement. The lack of regulation and standards has contributed to several disagreements between the Brazilian Government and contractors, regarding the procedures and results of cost analysis, particularly overhead cost. This thesis examines accounting concepts and various regulations that deal with overhead cost in the United States Department of Defense (DoD). Several other useful concepts regarding the application of cost principles used in the United States are discussed and applied to the Brazilian Air Force (BAF).