How would you treat the possible future costs of a lawsuit

Assignment Help Business Economics

Reference no: EM13148964

1. Your company, Bright Paints, is one of a dozen companies manufacturing a special reflective paint used for traffic signs. The State Department of Transportation has called for tenders to supply 10,000 gallons of blue reflective paint to be delivered within two months. You can foresee fitting in a production run of the blue paint and have decided to bid on the job. You calculate your incremental costs for this job to be $76,200. This particular contract is standard, similar in all in respects to hundreds of contracts you have bid on over the past few years. Your pricing policy has been to apply a mark-up to incremental costs to arrive at the bid price. Your mark-up has been higher when you had plenty of orders and lower when you had few or no orders to fulfill. You have assembled data relating the mark-up rate used and the percentage of contracts won at each mark-up rate, as follows. Mark-up rate (%) Percentage of contracts won at that rate (%) 0 95.9 10 84.8 15 65.4 20 41.3 25 15.7 30 3.0 35 0. a. Why would your company have bid with a zero mark-up on some past tenders? Why didn’t it win all of those contracts? b. What is the bid price that maximizes the expected contribution of the contract? c. Why, or why not, is the fixed-price mode of bidding likely to be the best one to use for this contract? 2. In calculating the incremental cost of a particular project, how would you treat the possible future costs of a lawsuit that may occur as a result of this project, where the cost of the lawsuit might range from $10,000 to $500,000 with an associated probability distribution?

Reference no: EM13148964

Questions Cloud

What are the economic effects of a depreciation of the us : Include both advantages and disadvantages in you argument. What are the economic effects of a depreciation of the US dollar on US trade balances?

Find how many outside salespeople should be sample : If the population meanis to be estimated to within two days, with 95% confidence, how many outside salespeople should be sample.

How many grams of dry nh4cl need to be added : How many grams of dry NH4Cl need to be added to 2.50 L of a 0.100 M solution of ammonia, NH3, to prepare a buffer solution that has a pH of 9.00? kb for ammonia is 1.8*10^-5.

What is the haplotype of a normal person : In malignant hyperthermia, a person develops a life threatening high fever after taking certain types of anesthetic drugs. DNA sequencing of individuals with the disorder showed that in position 33 A nucleotide is substituted by G, in 513 - C by T..

How would you treat the possible future costs of a lawsuit : In calculating the incremental cost of a particular project, how would you treat the possible future costs of a lawsuit that may occur as a result of this project, where the cost of the lawsuit might range from $10,000 to $500,000 with an associat..

Hypothesis test to determine whether average weight is more : Construct a hypothesis test to determine whether the average weight of a Smoky Bear moving van is more that 12,000 lb. Us a 5% level of significance.

Define heat capacities of solid and liquid x are identical : Consider a substance X with a Hvap = 20.3 kj/mol and Hfus = 9.0 kj/mol. The melting point, freezing point, and heat capacities of both the solid and the liquid X are identical to those of water

Payment cycle and the conversion cycle : Explain the most likely points of integration between the acquisition/payment cycle and the conversion cycle business process level models.

What expected proportion of their progeny will hide : In Ground hogs the allele E for the ability to see shadows is dominant to the allele e for the inability to see shadows. The dominant allele H causes groundhogs to hide from shadows that they see.

User Account

All Pages