A Contract Type That Involves Payment for the Actual Cost

question 79

Multiple Choice

A contract type that involves payment for the actual cost of the product plus a fee that represents the vendor's profits is called:

• A)fixed- price contract.
• B)cost- reimbursable contract.
• C)time- and- materials contract.
• D)incentive- based contract.

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Definitions:

Cost Control

Measures implemented by a company to maintain cost efficiency and budget adherence during its operations.

Weighted-Average Method

An inventory valuation method that calculates the cost of goods sold and ending inventory based on the average cost of all items available for sale during the period.

FIFO Method

First-In, First-Out, an inventory valuation method where the costs of the earliest goods purchased are the first to be recognized in determining cost of goods sold.

Conversion Costs

The costs incurred in the process of converting raw materials into finished goods, typically including labor and overhead expenses.