Regarding Bid Pricing

question 147

Multiple Choice

Regarding bid pricing:

• A) the same overhead charges and profit rates should apply to all bids--to avoid legal problems.
• B) most firms should try to bid for as many jobs as possible--to spread risk.
• C) all business buyers are legally required to accept the lowest bid--if they ask for bids.
• D) the big problem for sellers is estimating all the costs--including the variable and fixed costs--that apply to a particular job.
• E) All of the above are true.

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Definitions:

High-low Method

A technique used in accounting to estimate fixed and variable costs based on the highest and lowest levels of activity.

Electrical Cost

The expenses associated with the consumption of electricity by a company or facility.

High-low Method

A technique used in cost accounting to estimate cost behavior and predict future costs based on the highest and lowest levels of activity and their corresponding costs.

Inspection Cost

Expenses incurred to ensure products meet quality standards, including costs of labor, equipment, and facilities used in inspection.