What was the cost-plus system

cost-plus system where a contractor is paid for all of its allowed expenses

Explanation:

cost-plus contract, also termed a cost plus contract, is a contract where a contractor is paid for all of its allowed expenses, plus additional payment to allow for a profit.

In a cost-plus contract, a party agrees to reimburse a contractor for expenses plus a specific amount of profit, usually stated as a percentage of the contract's full price. Cost-plus contracts are primarily used to allow the buyer to assume the risk of the success of the contract from the contractor.

Suppose that a company sells a product for $1, and that $1 includes all the costs that go into making and marketing the product. The company may then add a percentage on top of that $1 as the "plus" part of cost-plus pricing. That portion of the price is the company's profit.