Working on a problem do I add incremental costs to fully allocated costs to determine a recommended bid price? OR does the fully allocated costs already include incremental costs? The problem states :...

Working on a problem do I add incremental costs to fully allocated costs to determine a recommended bid price? OR does the fully allocated costs already include incremental costs?

The problem states :

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

1. What price would you bid if you must win the project?


2. What price would you bid if you want to maximize the expected value of the contribution from this contract?