A Safety Harbor change order has estimated cost of $221,500 and markup on cost of 12.0%. What price should be quoted?
Correct Answer
B) $248,080.00
Markup on cost adds the stated percentage of cost to the cost base.
Why This Is the Correct Answer
Markup on cost adds the stated percentage of cost to the cost base.
Why the Other Options Are Wrong
Option A: $26,580.00
$26,580.00 is below the supported result for markup on cost; it likely uses the wrong base, period, or account bucket.
Option C: $251,704.55
$251,704.55 is above the supported result for markup on cost; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $222,700.00
$222,700.00 is below the supported result for markup on cost; it likely uses the wrong base, period, or account bucket.
Memory Technique
Markup On Cost fence: markup starts at cost, margin looks back from price.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Section Three, Financial Analysis, Markup and Gross Profit; use the job ledger figures in the stem and recompute the same accounting measure.
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