Get premium membership and access questions with answers, video lessons as well as revision papers.
The manufacturing concerns set the selling prices of their products at specific levels. Selling price of a product must be reasonable. If selling price is too high then due to competition from rivals, a firm's sales can be affected adversely. Similarly, if selling price is too low then a firm can go into loss. It is more advisable that a business concern should ascertain its cost and then add its profit into cost of sales. The cost data are helpful in setting prices of the products of a business concern.
A quotation is an offer to supply goods according to the terms and conditions of the purchasers. A quotation contains the price per unit of a specific product. A manufacturer or supplier shows the willingness to supply goods to a potential customer at specific prices in response to an inquiry. When this quotation is accepted by the inquirer then a binding contract is formed between the supplier and buyer. The cost data are used to prepare quotations. A supplier should quote those prices only which can give him some reasonable profit. For this purpose, a supplier should prepare cost statements before giving his quotations.
Wilfykil answered the question on April 15, 2019 at 09:40