What costs can be justified when a firm enters into agreements for the development and production of customized products with the Federal government?
A)Variable costs
B)Fixed costs
C)Full costs
D)Absorption costs

Question

Quizplus · Accepted Answer

When a firm enters into agreements for the development and production of customized products with the Federal government, it can justify full costs. Full costs include both direct and indirect costs, encompassing all expenses related to the project. This approach ensures that the firm covers all its costs in the pricing of the contract, which is particularly important in government contracts where the products are customized and may require significant upfront investment in development and production.

What Costs Can Be Justified When a Firm Enters into Agreements