Replacing Cost-Based Reimbursement Contracts with Fixed Fee Reimbursement Contracts Is

question 69

Multiple Choice

Replacing cost-based reimbursement contracts with fixed fee reimbursement contracts is one way to:

• A) Reduce the incentive to biased information when allocating support department costs
• B) Eliminate uncertainty when allocating support department costs
• C) Consider perceived fairness when allocating support department costs
• D) Eliminate the need to allocate support department costs

---

Definitions:

Cash Flow

The total amount of money being transferred into and out of a business, measuring financial health.

Probability

A measure of the likelihood that an event will occur, often expressed as a number between 0 and 1.

Following Year

The year that comes after the current year, often in the context of planning or forecasting.

Pure Play Method

A valuation method that compares a company to others within the same industry or sector with a single focus or product line.