Using the same direct cost of $72,000 and bid price of $90,000, what gross margin is shown?
Correct Answer
B) 20 percent.
Gross margin is profit divided by price. Profit is $18,000, and $18,000 / $90,000 = 20 percent.
Why This Is the Correct Answer
Gross margin is profit divided by price. Profit is $18,000, and $18,000 / $90,000 = 20 percent.
Why the Other Options Are Wrong
Option A: 25 percent.
25 percent. is above the supported result for margin calculation; it likely adds an unsupported amount or compares the wrong financial base.
Option C: 18 percent.
18 percent. is below the supported result for margin calculation; it likely uses the wrong base, period, or account bucket.
Option D: 80 percent.
80 percent. is above the supported result for margin calculation; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Margin fence: markup starts at cost, margin looks back from price.
Reference Hint
Study anchor (closed-book): memorize Margin calculation from CSLB Law and Business Study Guide; CSLB 2026 Law Book / CSLB Law and Business Study Guide Business Finances; know the rule or calculation trigger without relying on exam-room lookup.
More Law & Business Questions
A Fresno homeowner wants a $725 cabinet repair and trim adjustment. Which contract step best matches CA home improvement requirements?
A project has $6,500 retainage withheld. The owner releases 60 percent of retainage at substantial completion. How much cash is released?
Cash is $52,500 and monthly burn is $17,500. How many months of runway are available?
A supplier offers 1.5 percent early-pay discount on a $22,000 invoice. What is the discount?
A balance sheet lists assets of $310,000 and liabilities of $185,000. What is owner's equity?
A job is estimated to cost $135,000. What price gives a 25 percent gross margin?
A customer invoice of $4,000 has a stated late charge of 1.5 percent. What late charge is added?
A bid has direct labor of $18,000, materials of $12,500, and equipment rental of $3,500. If the contractor adds 20 percent markup on direct cost, what is the bid price?
A contractor wants a 25 percent gross margin on a job with estimated cost of $60,000. What selling price gives that margin?
A completed project sold for $150,000 and had total cost of $126,000. What gross margin percentage did the project earn?