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Calculate the organizations total cost for the following scenario: The organization has signed a cost-plus-incentive-fee con

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Answer #1
Actual Price = Actual Cost + Actual Fee
Actual Fee = Target Fee + Underrun adjustment OR Target Fee - Overrun adjustment
a)
Allowable expenses          150,000
(-) Actual expenses/cost          146,000
Underrun of cost (Benefit)              4,000
Sellers share percentage 10%
Underrun share of the seller                  400
Target Fee            10,000
Actual Fee (Target Fee + Underrun)            10,400
Actual Cost          146,000
Actual Price          156,400
b)
Allowable expenses          150,000
Actual expenses/cost          190,000
Overrun of cost (190,000 - 150,000)            40,000
Sellers share percentage 10%
Overrun share of the seller              4,000
Target Fee            10,000
Actual Fee (Target Fee - Overrun)              6,000
Actual Cost          190,000
Actual Price          196,000
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