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Using the data shown: TARGET COST: 12,000, TARGET FEE: 1000, SHARE RATION: 80/20 and PRICE CEILING: 14,000. The profit at the point of total assumption is:
Correct Answer: C
Same as above, PTA = 13250. We need to calculate profit at PT A. PTA = 13250 means Actual Cost = 13250 and Actual price = Ceiling price = 14000. So, the Actual fee = 14000 13250 = 750. Answer is C.[Or] At PTA, cost overrun = 13250 12000 = 1250 Seller's share of the cost overrun = 20% of 1250 = 250Actual Fee = Target Fee - Seller's share of cost overrun= 1000 - 250 = 750.