A ______ contract is desired when the purchases are expensive and the cost of material/labor to produce the products is uncertain.

Question

Quizplus · Accepted Answer

A cost-plus contract is the best choice in this scenario because it involves the buyer reimbursing the seller for actual costs incurred plus a predetermined profit margin. This type of contract provides protection to the seller in case the cost of materials and labor increases unexpectedly. It also incentivizes the seller to find cost-saving solutions while ensuring a fair profit margin.

A ______ Contract Is Desired When the Purchases Are Expensive