Management's Discussion and Analysis (MD&A) is a required part of Required Supplementary Information (RSI) under GASB standards. It includes:
An overview and analysis of financial activities
Condensed comparative financial data
A discussion of the basic financial statements
An explanation of significant changes from the prior year
However, computation of legal debt margins is not required in the MD&A. This type of information is typically included in the statistical section of the ACFR (Annual Comprehensive Financial Report), not in MD&A.
Relevant References:
GASB Statement No. 34 - Basic Financial Statements and Management's Discussion and Analysis GASB Codification Section 2200 - MD&A Requirements GFOA ACFR Checklist C). computation of legal debt margins

For state and local governments, GASB (Governmental Accounting Standards Board) is the authoritative standard-setting body. If a GASB principle exists, it must be followed, even if a FASB (Financial Accounting Standards Board) principle suggests a different approach.
FASB guidance may only be used in the absence of applicable GASB guidance - and even then, only when it does not conflict with governmental accounting objectives.
Relevant References:
GASB Statement No. 76 - The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments GASB Concepts Statements GAO and GFOA Reporting Manuals A). the principle established by GASB

A permanent fund is a governmental fund used to report resources that are legally restricted so that only earnings (not principal) may be used to support government programs. These are typically endowments where the corpus is preserved in perpetuity.
According to GASB Statement No. 34, permanent funds are classified under governmental funds and must be used to benefit the government or its citizenry.
Relevant Standards and References:
GASB Statement No. 34, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments GASB Codification Section 1300, Fund Types GFOA Budgeting & Fund Balance Guidance Therefore, Option B is correct.

State and local government budgets primarily serve to:
Set public policy priorities
Provide legislative control over taxing and spending
Serve as a financial planning tool
Debt policy is typically established outside the annual budget process and guided by a separate debt management policy that sets borrowing limits, credit rating objectives, and debt service goals.
Relevant References:
GFOA Best Practices - Role of the Budget
NASBO Budgeting Handbook
GASB Concept Statements - Financial Reporting Objectives
C). determine debt policy

Under FASAB standards, specifically SFFAS No. 4, Managerial Cost Accounting Standards, the full cost of an output includes:
Direct costs (e.g., direct material and labor)
Indirect costs (e.g., inter-entity costs, overhead, services)
In-kind contributions
Any support service costs
Depreciation or amortization, if applicable
We will now compute the full cost of all 5 units and then divide by 5 to obtain the cost per unit.
Step 1: List and sum all relevant costs.
Direct Material: $11,267,000
Direct Labor: $5,980,000
Inter-entity Costs: $1,500,000
Accounting and Contracting Services: $500,000
Physical and Data Security: $700,000
In-kind Logistics Services: $500,000
Warehouse Lease: $1,000,000
Parking Lot Construction: $3,000,000
Equipment Installation: $600,000
New Employee Training: $100,000
Total Full Cost =
$11,267,000
$5,980,000
$1,500,000
$500,000
$700,000
$500,000
$1,000,000
$3,000,000
$600,000
$100,000
= $25,147,000
Step 2: Calculate cost per unit (based on 5 outputs):
Cost per unit = $25,147,000 ÷ 5 = $5,029,400
But the question specifically asks:
"Based on FASAB standards, calculate the full cost of 1 unit of an output..." So, the correct answer (full cost of all units) is:
D). $25,147,000
If they had asked for cost per unit, then the answer would be:
= $5,029,400 # Option C
Note: Option C is a distractor here and would only be correct if the question specifically asked for per unit cost.
Relevant Standards and References:
FASAB Statement of Federal Financial Accounting Standards (SFFAS) No. 4: Managerial Cost Accounting Concepts and Standards OMB Circular A-136: Financial Reporting Requirements Treasury Financial Manual (TFM), Volume I, Part 2, Chapter 4700 Therefore, the correct answer to the full cost (not per unit) is:
D). $25,147,000.