Why Is It Best to Exclude Price from a Proposal

question 71

Multiple Choice

Why is it best to exclude price from a proposal document created for a group presentation?

• A) Fees and charges will create group confusion.
• B) Prices charged by competitors are hard to obtain.
• C) Fluctuations in the economy prevent pricing accuracy.
• D) Shipping and handling fees are difficult to estimate.
• E) Price rather than the document will become the focus.

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Definitions:

Factory Overhead Applied

The allocation of all indirect costs of manufacturing to the actual production, aiding in the determination of the total cost of production.

Predetermined Factory Overhead Rate

The rate used to apply factory overhead costs to the goods manufactured. The rate is determined by dividing the budgeted overhead cost by the estimated activity usage at the beginning of the fiscal period.

Activity Base

A measure used in costing, representing a unit of activity that triggers costs, helping to allocate costs more accurately.

Factory Overhead

Factory overhead refers to all indirect costs associated with manufacturing, excluding direct materials and direct labor expenses.