A Haines City administrative service charge applies 9.5% markup to a reimbursable office cost of $18,400. What amount should be billed if the contract allows the markup?
Correct Answer
D) $20,148.00
Allowed markup billing equals reimbursable cost plus the stated markup.
Why This Is the Correct Answer
Allowed markup billing equals reimbursable cost plus the stated markup.
Why the Other Options Are Wrong
Option A: $1,748.00
$1,748.00 is below the supported result for reimbursable markup; it likely uses the wrong base, period, or account bucket.
Option B: $18,400.00
$18,400.00 is below the supported result for reimbursable markup; it likely uses the wrong base, period, or account bucket.
Option C: $20,331.49
$20,331.49 is above the supported result for reimbursable markup; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Reimbursable Markup fence: markup starts at cost, margin looks back from price.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Business Administration, Reimbursable Cost Administration; use the stated business record or control rule to verify the answer.
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