Estimated cost for a Doral commercial job is $1,135,000 and the contractor applies a 16% markup on cost. What selling price should be quoted?
Correct Answer
B) $1,316,600
Markup on cost adds the stated percentage of cost to the estimated cost.
Why This Is the Correct Answer
Markup on cost adds the stated percentage of cost to the estimated cost.
Why the Other Options Are Wrong
Option A: $1,271,200
$1,271,200 is below the supported result for markup on cost; it likely uses the wrong base, period, or account bucket.
Option C: $1,350,650
$1,350,650 is above the supported result for markup on cost; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $1,351,190
$1,351,190 is above the supported result for markup on cost; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Two shelves for markup on cost: cost side first or price side first.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Section One, Planning for Profits, The Relationship Between Volume and Profit; use the job ledger figures in the stem and recompute the same accounting measure.
More Business & Finance Questions
The Cedar Key subcontract closeout file requires 44 final releases, and 31 have been received. How many releases are missing?
A Florida GC prepaid $18,000 for annual insurance and expenses it evenly by month. After 7 months have expired, what prepaid asset remains?
The West Miami system access list starts with 22 active users, adds 4, and removes 7. How many active users should remain?
The Winter Park bank review shows a bank balance of $124,600, book balance of $119,400, and known timing items of $3,200. What unexplained difference remains?
The Riverview bank review shows a bank balance of $87,500, book balance of $90,400, and known timing items of $1,600. What unexplained difference remains?
A Satellite Beach contractor had 4 separations during the quarter and an average headcount of 32. What turnover rate should HR report?
A Winter Park startup budgets monthly overhead of $61,500 and wants a 4-month operating reserve. What reserve should be funded?
A Royal Palm Beach customer account has unpaid approved invoices of $126,000. Company policy requires review when unpaid invoices exceed $100,000. What status applies?
A Wildwood contractor had 9 separations during the quarter and an average headcount of 60. What turnover rate should HR report?
A Clermont field group had 64 absence hours out of 1280 scheduled hours. What absence rate should be reported?
People Also Study
Related Study Resources
Previous Question
The Winter Garden accounts-payable file shows this issue: materials received on June 29 but invoiced July 2. Which administrative control should be applied?
Next Question
The Crestview HR compliance audit finds this issue: payroll record missing address data. Which office response fits best?