Contract: Contract is a business and legally binding agreement between two or more organizations to carry out financial transactions in turn for exchange of goods and services...

Question

Want to see the full answer?

Answer 1

Expert Solution & Answer

Chapter 12, Problem 3DQ

Explanation of Solution

Contract:

Contract is a business and legally binding agreement between two or more organizations to carry out financial transactions in turn for exchange of goods and services...

Explanation of Solution

The different types of contracts and the advantages, disadvantages of each are explained below:

Fixed price or lump sum contract:

In a fixed price contract, the seller and the buyer agree on a mutually agreed fixed price for the exchange of products or services. In terms of risk in this contract, the seller faces a higher risk than buyer.

This contract can be Firm-Fixed-Price (FFP), Fixed-Price Incentive Fee (FPIF) and Fixed-Price Economic Price Adjustment (FP-EPA).

The advantages of this contract are that it is beneficial for buyers as it minimizes their risk. Also, there is no need for adjustments, as both parties agree on a fixed price in advance.

A major disadvantage is that there is absence of continuous communication between the parties after the contract agreement is set in place.

Cost reimbursable contract:

Here, the contract focusses on a fixed time period and an extension of the same calls for payment reimbursement.

The payment can be made separately as direct and indirect costs and the contract puts a lot of risk on the seller.

Cost reimbursable projects can be classified as Cost Plus Incentive Fee (CPIF), Cost Plus Fixed Fee (CPFF), Cost Plus Award Fee (CPAF) and Cost-Plus Percentage of Cost (CPPC)...

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

The board of directors of a company decides that senior management has to be rewarded in order to achieve the company's objectives. The board of directors selects whether or not to award bonuses based on growth in share value at the end of each fiscal year. Bonuses will be given in shares, which the managers can keep or sell on the open market. What are the ramifications of implementing a bonus system like this?

What is total cost of ownership (TCO)? What costs often are underestimated?

The board of directors of an organization determines that it is necessary to create incentives for senior management to advance the organization's aims. The board of directors determines whether to award bonuses based on growth in share value at the end of each fiscal year. Bonuses are to be paid in shares that managers may hold or sell on the open market. What are the consequences of implementing such a bonus system?

Answer 2

Expert Solution & Answer

Chapter 12, Problem 3DQ

Explanation of Solution

Contract:

Contract is a business and legally binding agreement between two or more organizations to carry out financial transactions in turn for exchange of goods and services...

Explanation of Solution

The different types of contracts and the advantages, disadvantages of each are explained below:

Fixed price or lump sum contract:

In a fixed price contract, the seller and the buyer agree on a mutually agreed fixed price for the exchange of products or services. In terms of risk in this contract, the seller faces a higher risk than buyer.

This contract can be Firm-Fixed-Price (FFP), Fixed-Price Incentive Fee (FPIF) and Fixed-Price Economic Price Adjustment (FP-EPA).

The advantages of this contract are that it is beneficial for buyers as it minimizes their risk. Also, there is no need for adjustments, as both parties agree on a fixed price in advance.

A major disadvantage is that there is absence of continuous communication between the parties after the contract agreement is set in place.

Cost reimbursable contract:

Here, the contract focusses on a fixed time period and an extension of the same calls for payment reimbursement.

The payment can be made separately as direct and indirect costs and the contract puts a lot of risk on the seller.

Cost reimbursable projects can be classified as Cost Plus Incentive Fee (CPIF), Cost Plus Fixed Fee (CPFF), Cost Plus Award Fee (CPAF) and Cost-Plus Percentage of Cost (CPPC)...

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Expert Solution & Answer

Chapter 12, Problem 3DQ

Explanation of Solution

Contract:

Contract is a business and legally binding agreement between two or more organizations to carry out financial transactions in turn for exchange of goods and services...

Explanation of Solution

The different types of contracts and the advantages, disadvantages of each are explained below:

Fixed price or lump sum contract:

In a fixed price contract, the seller and the buyer agree on a mutually agreed fixed price for the exchange of products or services. In terms of risk in this contract, the seller faces a higher risk than buyer.

This contract can be Firm-Fixed-Price (FFP), Fixed-Price Incentive Fee (FPIF) and Fixed-Price Economic Price Adjustment (FP-EPA).

The advantages of this contract are that it is beneficial for buyers as it minimizes their risk. Also, there is no need for adjustments, as both parties agree on a fixed price in advance.

A major disadvantage is that there is absence of continuous communication between the parties after the contract agreement is set in place.

Cost reimbursable contract:

Here, the contract focusses on a fixed time period and an extension of the same calls for payment reimbursement.

The payment can be made separately as direct and indirect costs and the contract puts a lot of risk on the seller.

Cost reimbursable projects can be classified as Cost Plus Incentive Fee (CPIF), Cost Plus Fixed Fee (CPFF), Cost Plus Award Fee (CPAF) and Cost-Plus Percentage of Cost (CPPC)...

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Expert Solution & Answer

Chapter 12, Problem 3DQ

Explanation of Solution

Contract:

Contract is a business and legally binding agreement between two or more organizations to carry out financial transactions in turn for exchange of goods and services...

Explanation of Solution

The different types of contracts and the advantages, disadvantages of each are explained below:

Fixed price or lump sum contract:

In a fixed price contract, the seller and the buyer agree on a mutually agreed fixed price for the exchange of products or services. In terms of risk in this contract, the seller faces a higher risk than buyer.

This contract can be Firm-Fixed-Price (FFP), Fixed-Price Incentive Fee (FPIF) and Fixed-Price Economic Price Adjustment (FP-EPA).

The advantages of this contract are that it is beneficial for buyers as it minimizes their risk. Also, there is no need for adjustments, as both parties agree on a fixed price in advance.

A major disadvantage is that there is absence of continuous communication between the parties after the contract agreement is set in place.

Cost reimbursable contract:

Here, the contract focusses on a fixed time period and an extension of the same calls for payment reimbursement.

The payment can be made separately as direct and indirect costs and the contract puts a lot of risk on the seller.

Cost reimbursable projects can be classified as Cost Plus Incentive Fee (CPIF), Cost Plus Fixed Fee (CPFF), Cost Plus Award Fee (CPAF) and Cost-Plus Percentage of Cost (CPPC)...

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Expert Solution & Answer

Answer 6

Expert Solution & Answer

Answer 7

Chapter 12, Problem 3DQ

Explanation of Solution

Contract:

Contract is a business and legally binding agreement between two or more organizations to carry out financial transactions in turn for exchange of goods and services...

Explanation of Solution

The different types of contracts and the advantages, disadvantages of each are explained below:

Fixed price or lump sum contract:

In a fixed price contract, the seller and the buyer agree on a mutually agreed fixed price for the exchange of products or services. In terms of risk in this contract, the seller faces a higher risk than buyer.

This contract can be Firm-Fixed-Price (FFP), Fixed-Price Incentive Fee (FPIF) and Fixed-Price Economic Price Adjustment (FP-EPA).

The advantages of this contract are that it is beneficial for buyers as it minimizes their risk. Also, there is no need for adjustments, as both parties agree on a fixed price in advance.

A major disadvantage is that there is absence of continuous communication between the parties after the contract agreement is set in place.

Cost reimbursable contract:

Here, the contract focusses on a fixed time period and an extension of the same calls for payment reimbursement.

The payment can be made separately as direct and indirect costs and the contract puts a lot of risk on the seller.

Cost reimbursable projects can be classified as Cost Plus Incentive Fee (CPIF), Cost Plus Fixed Fee (CPFF), Cost Plus Award Fee (CPAF) and Cost-Plus Percentage of Cost (CPPC)...

Answer 8

Chapter 12, Problem 3DQ

Explanation of Solution

Contract:

Contract is a business and legally binding agreement between two or more organizations to carry out financial transactions in turn for exchange of goods and services...

Answer 9

Chapter 12, Problem 3DQ

Explanation of Solution

Contract:

Contract is a business and legally binding agreement between two or more organizations to carry out financial transactions in turn for exchange of goods and services...

Answer 10

Explanation of Solution

The different types of contracts and the advantages, disadvantages of each are explained below:

Fixed price or lump sum contract:

In a fixed price contract, the seller and the buyer agree on a mutually agreed fixed price for the exchange of products or services. In terms of risk in this contract, the seller faces a higher risk than buyer.

This contract can be Firm-Fixed-Price (FFP), Fixed-Price Incentive Fee (FPIF) and Fixed-Price Economic Price Adjustment (FP-EPA).

The advantages of this contract are that it is beneficial for buyers as it minimizes their risk. Also, there is no need for adjustments, as both parties agree on a fixed price in advance.

A major disadvantage is that there is absence of continuous communication between the parties after the contract agreement is set in place.

Cost reimbursable contract:

Here, the contract focusses on a fixed time period and an extension of the same calls for payment reimbursement.

The payment can be made separately as direct and indirect costs and the contract puts a lot of risk on the seller.

Cost reimbursable projects can be classified as Cost Plus Incentive Fee (CPIF), Cost Plus Fixed Fee (CPFF), Cost Plus Award Fee (CPAF) and Cost-Plus Percentage of Cost (CPPC)...

Answer 11

Explanation of Solution

The different types of contracts and the advantages, disadvantages of each are explained below:

Fixed price or lump sum contract:

In a fixed price contract, the seller and the buyer agree on a mutually agreed fixed price for the exchange of products or services. In terms of risk in this contract, the seller faces a higher risk than buyer.

This contract can be Firm-Fixed-Price (FFP), Fixed-Price Incentive Fee (FPIF) and Fixed-Price Economic Price Adjustment (FP-EPA).

The advantages of this contract are that it is beneficial for buyers as it minimizes their risk. Also, there is no need for adjustments, as both parties agree on a fixed price in advance.

A major disadvantage is that there is absence of continuous communication between the parties after the contract agreement is set in place.

Cost reimbursable contract:

Here, the contract focusses on a fixed time period and an extension of the same calls for payment reimbursement.

The payment can be made separately as direct and indirect costs and the contract puts a lot of risk on the seller.

Cost reimbursable projects can be classified as Cost Plus Incentive Fee (CPIF), Cost Plus Fixed Fee (CPFF), Cost Plus Award Fee (CPAF) and Cost-Plus Percentage of Cost (CPPC)...

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 15

Ch. 12 - List five reasons why organizations outsource....Ch. 12 - Prob. 2DQ Ch. 12 - Prob. 3DQ Ch. 12 - Prob. 4DQ Ch. 12 - Prob. 5DQ Ch. 12 - Prob. 6DQ Ch. 12 - Prob. 7DQ Ch. 12 - Prob. 8DQ Ch. 12 - Prob. 6QQ Ch. 12 - Prob. 7QQ

Contract: Contract is a business and legally binding agreement between two or more organizations to carry out financial transactions in turn for exchange of goods and services...

Solution Summary: The author explains the different types of contracts and the advantages and disadvantages of each.

Explanation of Solution

Contract:

Contract is a business and legally binding agreement between two or more organizations to carry out financial transactions in turn for exchange of goods and services...

Explanation of Solution

Want to see the full answer?

Chapter 12 Solutions