alleryStart learning →What is a criticism of cost-plus contracts?
AIt needs no cost records
BIt prevents any markup
CWeak incentive to control costs
DPrices become too volatile
Answer & Solution
Correct answer: C. Weak incentive to control costs
Because costs are reimbursed with a markup, suppliers have little reason to economise.
Keep practising Cost Volume Profit Analysis and Pricing Decisions
Browse all Cost Volume Profit Analysis and Pricing Decisions questions for CA Final, or explore more Cost and Management Accounting topics.
Related questions
Fixed costs are Rs 20,000 and variable cost is Rs 6 a unit. Total cost at 4,000 units?Margin of safety shows how far sales can fall before what?Which action lowers the break-even point?A firm needs 200 tables to break even but sells fewer. How is it operating?Target costing was developed independently in the USA and which country?Market-driven target costing identifies a product's what?Which technique is most critical in reaching a target cost?Target costing is described as which approach to cost management?