Question

Cost-plus contract is usually entered into in those cases where :
(A) Cost can be easily estimated
(B) It is not possible to compute the accurate cost in advance
(C) Contractor wants to earn a fixed amount of profit
(D) None of these
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Answer 1

Answer:

itz option b)

hope this will helps u...be happy...

@ITZSUGARYHEAVEN3

Answer 2

Answer:

The correct answer is option (b) It is not possible to compute the accurate cost in advance

Explanation:

• In a cost-plus contract, one party agrees to reimburse the contracting party for expenses plus a profit proportional to the contract's total value.
• When the budget is limited or there is a high probability that actual costs will be less than anticipated, cost-plus contracts are frequently used in construction.
• Contractors must provide documentation for all related costs, including direct and indirect costs.
• Cost-plus contracts are commonly used when one party has a limited budget or when the overall scope of the work cannot be accurately estimated in advance.
• In the construction industry, cost-plus contracts are used to reimburse contractors for almost every expense incurred on a project.

• The builder is compensated for both direct and indirect or overhead costs under the cost-plus contract.
• All expenses must be accompanied by invoices or receipts that detail the contractor's spending.

Hence, we can conclude that when it is not possible to compute the accurate cost in advance then a cost-plus contract is entered into.

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