EstatePass
nascla-commercial-gcEstimatinghard

A contractor's annual revenue is $2.4 million with a net profit margin of 8%. Fixed overhead costs are $180,000 annually. Variable costs run 75% of revenue. What profit percentage should be added to bids to maintain the current profit margin?

Correct Answer

B) 8.7%

Current profit = $2.4M × 0.08 = $192,000. Total costs = $2.4M - $192,000 = $2.208M. To maintain 8% margin: Profit % = $192,000 ÷ $2.208M = 8.7%.

Answer Options
A
10.1%
B
8.7%
C
9.2%
D
8.0%

Why This Is the Correct Answer

Current profit = $2.4M × 0.08 = $192,000. Total costs = $2.4M - $192,000 = $2.208M. To maintain 8% margin: Profit % = $192,000 ÷ $2.208M = 8.7%.

Was this explanation helpful?

More nascla-commercial-gc Questions

People Also Study

Related Study Resources

Practice More Contractor Exam Questions

Access all practice questions with progress tracking and adaptive difficulty to pass your Florida General Contractor exam.

Start Practicing