Griffy, Li, and Bernard, a CA firm, is preparing to bid for a consulting job. Although Alicia Bernard will use her judgment about the market in finalizing the bid, she has asked you to prepare a cost analysis to help in the bidding. You have estimated the costs for the consulting job to be
Of the $44,000 allocated fixed costs, $35,000 will be incurred even if the job is not undertaken. Alicia normally bids jobs at the sum of (1) 150 percent of the estimated materials and supplies cost and (2) $75 per estimated labour-hour.
1. Prepare a bid using the normal formula.
2. Prepare a minimum bid equal to the additional costs expected to be incurred to complete the job.
3. Prepare a bid that will cover full costs plus a markup for profit equal to 20 percent of full cost.
