PTA calculation
Submitted by vijayavadrevu on Sat, 05/11/2013 - 12:18
Your company has mandated that all vendor contracts be cost reimbursable. The target cost for certain procurement is $900,000 with a target price of $960,000, a target fee of 10% and a price ceiling of $1,000,000. The share ratio is 50% for the buyer. What is the point of total assumption for this procurement?
A)$960,000
B)$900,000
C)$920,000
D)$1,000,000
PTA = Target cost + [(Ceiling price -(target cost + target fee))/buyer's share ratio]
Iam getting confused between target cost and target price? What is the significance of target price? Where will it be used? Has it been given as an extra information to confuse?
Can someone explain the difference?
Forums:
BK
Sat, 05/11/2013 - 13:09
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TP= TC+TF
TP= TC+TF
nusayr
Sat, 05/11/2013 - 13:13
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hi
heard that, PTA is not included in PMBOK 4... and never been in exam....
is it right?
vijayavadrevu
Sat, 05/11/2013 - 13:34
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What is the difference
What is the difference between target price and target cost? Can you please explain the concept?
BK
Sat, 05/11/2013 - 13:38
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http://www.deepfriedbrainpro
http://www.deepfriedbrainproject.com/2009/10/point-of-total-assumption-pta-formula.html.
see if this helps.
vijayavadrevu
Sat, 05/11/2013 - 13:48
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Thank You
Thank You
crushPMP
Sat, 05/11/2013 - 13:37
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I have also heard that, so
I have also heard that, so not paying much attention to this. Max I would lose is 1 question in the rare probability that a question like this pops up in the real exam. I stil have 199 more to go
cnpatilpmp2012 (not verified)
Sat, 05/11/2013 - 20:05
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C is the answer
Since the Target fee has been given as 10% , so the TP=TC+TF = 900,000+90,000=990000
PTA={(10000)/0.5}+900000
=20,000+900,000
=920,000
The only thing I doubt is about target price has been mentioned as 960,000 but still there is mention in %. So considering the 10% target fee the value would be 990,000. So, based on this assumption it should be C option.
Regards
CN Patil
cnpatilpmp2012 (not verified)
Sat, 05/11/2013 - 20:05
Permalink
C is the answer
Since the Target fee has been given as 10% , so the TP=TC+TF = 900,000+90,000=990000
PTA={(10000)/0.5}+900000
=20,000+900,000
=920,000
The only thing I doubt is about target price has been mentioned as 960,000 but still there is mention in %. So considering the 10% target fee the value would be 990,000. So, based on this assumption it should be C option.
Regards
CN Patil