In which of the following kinds of contracts is the actual, final cost of the project unknown until after the project is completed (circle all that apply):
A) cost reimbursement contract
B) fixed price contract
C) incentive fee contract
D) none of these

Question

Quizplus · Accepted Answer

In a cost reimbursement contract, the buyer reimburses the seller for the seller's allowable costs, plus a fee representing the seller's profit. The actual costs can vary, making the final cost unknown until the project is completed. In an incentive fee contract, the final cost can also be unknown until completion because it includes a variable fee based on the performance of the seller, which can affect the total cost. Fixed price contracts, by contrast, have a set price agreed upon in advance, making the final cost known from the start.

In Which of the Following Kinds of Contracts Is the Actual