Question

Suppose your business has agreed to pay a vendor for his services using a cost-plus-fixed-fee contract. This means _____.

a. the agreement is to pay for all the costs and a percentage of costs as fee
b. the agreement is to reimburse for all the costs plus an incentive fee if the vendor meets the deadline
c. ​the agreement is to provide a total fixed price for the service
d. ​the agreement is to reimburse the costs plus a fixed amount as fee

Answer 1

Answer: the agreement is to reimburse the costs plus a fixed amount as fee

Step-by-step explanation: A cost-plus-fixed-fee contract is an expense-reimbursement agreement which allows for a calculated price to be charged to the contractor at the start of the project.

The fixed price doesn't really differ with real costs, but can be changed as a response to changes in the job under the agreement to be done.

In other words, The cost-plus fixed fee arrangement is a special sort of contract in which the contractor is charged for the usual project costs, plus an extra fixed fee for their work. This enables the contractor to earn a profit on the job and promote allocation efficiency in different industries.