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 profits 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?

Question

Examsnet · Accepted Answer

Correct Answer is : The government might continue to pay for past inefficient use of funds.

GMAT Verbal Reasoning Practice Test 4