A building permit for a commercial project costs $3,200. Plan review fees are 65% of the permit cost, and impact fees are $8,500. If the contractor marks up all fees by 12%, what total amount should be included in the bid?
Correct Answer
C) $15,232
Plan review = $3,200 × 0.65 = $2,080. Total fees = $3,200 + $2,080 + $8,500 = $13,780. With 12% markup = $13,780 × 1.12 = $15,232. Proper calculation of permit and fee costs is essential for accurate bidding.
Why This Is the Correct Answer
Option D is correct because it properly calculates all three fee components and applies the markup correctly. The calculation includes the building permit ($3,200), plan review fees (65% of permit = $2,080), and impact fees ($8,500) for a subtotal of $13,780. When the 12% contractor markup is applied ($13,780 × 1.12), the total bid amount becomes $15,232.
Why the Other Options Are Wrong
Option B: $13,784
Option C ($14,896) indicates a calculation error, possibly using the wrong markup percentage or missing one of the fee components in the base calculation.
Option D: $13,580
Option A ($13,580) appears to be missing some fees or has calculation errors, likely forgetting to include all fee components or applying an incorrect markup percentage.
Memory Technique
Remember 'PPI-M': Permit + Plan review + Impact fees, then apply Markup to the total sum - never markup individual components separately.
Reference Hint
Florida Building Code - Administrative provisions chapter covering permit fees and fee calculations, or contractor licensing study guide sections on project cost estimation and bidding.
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