Reference no: EM13987361

You operate your own small building company and have decided to bid on a government contract to build a pedestrian walkway in a national park during the coming winter. The walkway is to be of standard government design and should involve no unexpected costs. Your present capacity utilization rate is moderate and allows sufficient scope to understand this contract, if you win it. You calculate your incremental costs to be $268,000 and your fully allocated costs to be $440,000. Your usual practice is to add between 60% and 80% to your incremental costs, depending on capacity utilization rate and other factors. You expect three other firms to also bid on this contract, and you have assembled the following competitor intelligence about those companies. Issue A B C Capacity full Med low utilization goodwill very moderate not consider concern prod. small med large facilities plant previous incremental full bidding 35-50% 8-12% 15% Pattern cost incremental similar incr structure exceed structure lower 10% to 20% yours full cost to yours aesthetic factors do not do not likes like projects winter messy creativity jobs political factors decisions makers is relative seeking looking of the a new for a buyer job promotion Show all of your calculations and processes. Describe your answers in three- to five-complete sentences. a. What price would you bid if you must win the project? b. What price would you bid if you want to maximize the expected value of the contribution from this contract? c. Defend your answers with discussion, making any assumptions you feel are reasonable and/or are supported by the information provided.