The ACME FPRA with the government contained a manufacturing overhead rate of 200% based on an overhead
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Question:
The ACME FPRA with the government contained a manufacturing overhead rate of 200% based on an overhead expense pool of $36 million and a manufacturing labor base of $18 million (3 contractors at $6 million each). How would the contractor be impacted if one of the contacts did not materialize?
The contractor would not fully capture it's overhead expenses and would incur a loss of profit on FFP contracts.
The contractor would lose fee on cost-reimbursement contracts.
Billing rates on cost reimbursement contracts would decrease.
There would be very little impact since the government would automatically adjust the over head rate in the FPRA.
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