A cost-plus-incentive-fee (CPIF) contract has a target cost of $300,000, a target fee of $40,000, and an 70/30 (buyer/seller) sharing ratio for cost savings. If actual costs come in at $270,000, what total price does the buyer pay the seller?

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$319,000. Cost underrun = 300,000 − 270,000 = 30,000. Seller's share = 30% × 30,000 = 9,000. Final fee = target fee + seller share = 40,000 + 9,000 = 49,000. Total price = actual cost + final fee = 270,000 + 49,000 = $319,000.

A cost-plus-incentive-fee (CPIF) contract has a target cost of $300,000, a target fee of $40,000, and an 70/30 (buyer/seller) sharing ratio for cost savings. If actual costs come in at $270,000, what total price does the buyer pay the seller?

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