Reference Entry

cost-plus contract

Edited by Jonathan Law

in A Dictionary of Accounting

Fifth edition

Published in print July 2016 | ISBN: 9780198743514
Published online November 2016 | e-ISBN: 9780191803147
cost-plus contract

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A contract entered into by a supplier in which the goods or services provided to the customer are charged at cost plus an agreed percentage mark-up. This method of pricing is very common if the cost of producing the commodity is unknown or if its production will involve significant research work. However, because simple cost-plus contracts do not encourage suppliers to minimize their costs, there has been a move away from this type of contract in UK government orders with private industry....

Reference Entry.  84 words. 

Subjects: Accounting

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