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CR- Weaken

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Intern
Joined: 14 Jun 2014
Posts: 5

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19 Sep 2018, 12:20
00:00

Difficulty:

(N/A)

Question Stats:

59% (01:12) correct 41% (01:08) wrong based on 15 sessions

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The price the government pays for standard weapons
purchased from military contractors is determined by
a pricing method called “historical costing.” Historical
costing allows contractors to protect their profi ts by
adding a percentage increase, based on the current
rate of inflation, to the previous year’s contractual price.

Which of the following statements, if true, is the best
basis for a criticism of historical costing as an
economically sound pricing method for military
contracts?

A) The government might continue to pay for past
inefficient use of funds.
(B) The rate of inflation has varied considerably over
the past twenty years.
(C) The contractual price will be greatly affected by
the cost of materials used for the products.
(D) Many taxpayers question the amount of money
the government spends on military contracts.
(E) The pricing method based on historical costing
might not encourage the development of
innovative weapons.
MBA Section Director
Affiliations: GMATClub
Joined: 22 May 2017
Posts: 2590
GPA: 4
WE: Engineering (Computer Software)
Re: CR- Weaken  [#permalink]

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19 Sep 2018, 19:01
Discussed here https://gmatclub.com/forum/topic260117.html

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Re: CR- Weaken   [#permalink] 19 Sep 2018, 19:01
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