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Exam Code: C_C4HCX_04

Exam Name: SAP Certified Application Associate - Solution Architect for CX

Certification Provider: SAP

Related Certification: SAP Certified Application Associate - Solution Architect for CX

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NEW QUESTION: 1
A buyer has negotiated a fixed-price-incentive-fee contract with the seller. The contract has a target cost of
$200,000, a target profit of $30,000, and a target price of $230,000. The buyer also has negotiated a ceiling price of $270,000 and a share ratio of 70/30. If the seller completes the contract with actual costs of
$170,000, how much profit will the buyer pay the seller?
A. $21,000
B. $51,000
C. $39,000
D. $35,000
Answer: C
Explanation:
Explanation/Reference:
Explanation:
To calculate the fee that the buyer must pay, actual costs are compared with the target cost. If actual costs are less than the target cost, the seller will earn profit that is additional to the target profit. If actual costs are more than the target cost, the seller will lose profit from the target profit. The amount of profit is determined by the share ratio (with the buyer's share listed first). In this example, the seller is under target cost by $30,000. That amount will be split 70/30. So the buyer keeps $21,000, and the seller receives an additional $9,000 added to the target profit, which is the incentive. Total fee is $39,000.


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