If a company has excess capacity, a sensible bidding strategy is to base the bid on the incremental costs incurred because the job will contribute toward the company's profit.

Question

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Basing the bid on incremental costs incurred is a sensible strategy when a company has excess capacity. This is because the incremental cost reflects the additional cost of producing the specific job, and bidding at this cost will ensure that the company earns a profit on the job.

If a Company Has Excess Capacity, a Sensible Bidding Strategy