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# The price the government pays for standard weapons purchased

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Manager
Joined: 22 Feb 2007
Posts: 67
The price the government pays for standard weapons purchased [#permalink]

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03 Apr 2007, 19:42
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The price the government pays for standard weapons purchased from military contractors is determined by a pricing method called â€œhistorical costing.â€
GMAT Club Legend
Joined: 07 Jul 2004
Posts: 5043
Location: Singapore

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03 Apr 2007, 19:52
Ans:A.

Since historical pricing adds on to the previous year's contractual price, the governement will pay if there was an inefficient use of funds in the past - i.e. if inefficient use led to higher contractual price paid out previously, then historical pricing applied today will include that amount of improperly managed fund paid out.
Manager
Joined: 26 Feb 2007
Posts: 114

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03 Apr 2007, 21:06
A.
Manager
Joined: 20 Nov 2006
Posts: 210

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03 Apr 2007, 21:16

ywilfred.... The explanation is apt.
03 Apr 2007, 21:16
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