Accounting 2 - Quotes (5.3)

Question 1

What are quotes?

Answer 1

A method of determining a selling price by estimating the costs involved with a particular job, and then adding on a certain amount to provide profit.

Question 2

Why are quotes necessary? Why not a standard price?

Answer 2

There are necessary because each job is unique, and setting a standard price does not account for the scale of the job.

Question 3

What are three things that a quote has to take into account?

Answer 3

• Cost of Labour
• Cost of materials
• Desired Profit

Question 4

Why might a business accept less than its quotes price?

Answer 4

• The business is just starting out and wants to establish a name or reputation
• There is strong competition in the marketplace
• The client might be a valued customer or have good connections

Question 5

Why might a business refuse to do a quote for less?

Answer 5

• Due to a high demand, the business might already have jobs lined up
• The lowered price would mean a loss on the job