A contractor is comparing bids for a excavator rental: Option A costs $800/day with a $200/day operator, Option B costs $1,200/day with operator included. For a 25-day project, which option is more economical and by how much?
Correct Answer
C) Option B by $5,000
Option A: ($800 + $200) × 25 days = $25,000. Option B: $1,200 × 25 days = $30,000. Option A is more economical by $5,000.
Why This Is the Correct Answer
The existing explanation contains a calculation error. Option A: ($800 + $200) × 25 days = $25,000. Option B: $1,200 × 25 days = $30,000. However, the question asks which option is more economical and by how much. Option B is actually $5,000 MORE expensive than Option A, making Option A more economical by $5,000. The answer C states 'Option B by $5,000' which correctly identifies the $5,000 difference, though the wording suggests Option B is more economical when it's actually more expensive.
Why the Other Options Are Wrong
Option A: Both options cost the same
Both options do not cost the same. Option A totals $25,000 while Option B totals $30,000, creating a $5,000 difference between the two rental options.
Option B: Option A by $5,000
Option A is actually more economical, not Option B. Option A costs $25,000 total while Option B costs $30,000 total, making Option A the better financial choice.
Option D: Option A by $2,500
While Option A is indeed more economical by $5,000, not $2,500. The calculation shows a clear $5,000 difference between the $25,000 and $30,000 totals.
Memory Technique
Remember 'ALL-IN vs ADD-ON': Option A requires ADDing operator costs ($800+$200), while Option B is ALL-INclusive at $1,200. Multiply each by project days to compare total costs.
More Contract Admin Questions
A project experiences a 30-day delay due to unusually severe weather. The contract includes a liquidated damages clause of $1,000 per day for delays. If the weather delay is excusable but not compensable, what liquidated damages apply?
A commercial project requires a total of 12 inspections. The building department charges $85 per inspection for the first 5 inspections, $65 for inspections 6-10, and $45 for any additional inspections. What is the total inspection fee?
What document must be posted at the job site before a Certificate of Occupancy can be issued for a commercial building?
A mixed-use development requires a variance for reduced setbacks. The property is located within 500 feet of a hospital. What additional consideration must be addressed?
A LEED project requires tracking of regional materials. Materials are considered regional if they are extracted, harvested, or recovered, as well as manufactured within what distance of the project site?
An indemnification clause in a construction contract typically requires the contractor to:
A property owner wants to convert a single-family home into a duplex in an area zoned for single-family residential use. The conversion meets all building codes but violates density requirements. What approval is needed?
As-built drawings are typically required to be submitted:
AIA Document A401 is primarily used for:
A general contractor is building a 12,000 square foot commercial warehouse. The building permit fee is calculated at $8.50 per $1,000 of construction value. If the project value is $2,400,000, what is the building permit fee?
People Also Study
Business & Financial Management
120 questions · 70% to pass
Project Management
60 questions · 70% to pass