If a company has excess capacity, which of the following is a sensible bidding strategy?
A. Downplay the potential impact of competitors.
B. Base the bid solely on direct labor hours.
C. Set a price to cover all costs.
D. Allocate common fixed costs to individual jobs before preparing the bid.
E. Base the bid on the incremental costs incurred because the job will contribute toward the company's profit.
Answer: E
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