Contract disputes regarding cost allocation can be reduced by defining which of the following?
A) the material items allowed for production
B) the terms used, such as what constitutes direct labor
C) permissible tax deductions
D) minimum profit level the company should earn

Question

Quizplus · Accepted Answer

Defining terms such as what constitutes direct labor can help avoid disputes over how costs should be allocated, which can ultimately reduce contract disputes. While the other options may also be important in some contexts, they are less directly related to cost allocation and therefore less effective in reducing such disputes.

Contract Disputes Regarding Cost Allocation Can Be Reduced by Defining