Question

1. Cost-plus contracts negotiated with suppliers of the government usually involves ________.

a price that covers the contract's cost plus other noncash benefits

a price that covers the contractor's direct costs plus an amount to cover overhead costs

the supplier's cost to perform the contact (provide the product or service) plus a fee

a price that allows the contractor to break-even

Answer 1

Answer is the supplier's cost to perform the contact (provide the product or service) plus a fee

Cost plus contract are designed in such a way that the Supplier of Goods or Service is able to recover the total cost incurred in providing the supply and to recover a fixed fee or charge over and above the cost as profit for the contract.

Thus it always makes the contract a profitable one and the fixed profit is also realized. The negotiated fee is fixed generally at the beginning.