Question

Supplier Corp. enters into a government contract during the year to provide computer equipment. Which of the following scenarios is applicable based on the contract details and incurred costs?

a) Supplier Corp. will receive the specified profit margin regardless of costs.
b) Supplier Corp. will be paid only the actual costs incurred.
c) Supplier Corp. will not receive any payment due to cost overruns.
d) Supplier Corp. will receive costs incurred plus a specified profit margin if the contract is canceled.

Answer 1

In a government contract, Supplier Corp. will be paid only the actual costs incurred for providing computer equipment.

Step-by-step explanation:

Based on the given scenarios and contract details, the applicable option would be b) Supplier Corp. will be paid only the actual costs incurred. In government contracts, it is common for suppliers to be paid based on the actual costs incurred for the provision of goods or services. This means that Supplier Corp. will be reimbursed for the expenses they have actually incurred in providing the computer equipment, rather than receiving a specified profit margin.