Fixed price contact allowance overage
Under a fixed price contract, are overages over allowance items charged at a profit or charged at cost?
Also, if an allowance is in the contract does that mean the profit percentage has already been applied? For example, if the contract provides for a 10K granite allowance and I choose granite costing exactly 10K, do I need to pay the profit percent? In other words, had the profit percentage embedded in the 10K or is that just the raw number? Sorry if that's a little confusing.
Thank you for all of your help!