In a time and materials contract, the contractor charges $85 per hour for labor with a 15% markup on materials. If 40 hours of labor were used and materials cost $2,400, what is the total contract amount?
Correct Answer
D) $6,160
Labor: 40 hours × $85 = $3,400. Materials with markup: $2,400 × 1.15 = $2,760. Total: $3,400 + $2,760 = $6,160.
Why This Is the Correct Answer
This is a straightforward time and materials calculation requiring two separate computations. First, calculate the labor cost by multiplying hours worked by the hourly rate (40 × $85 = $3,400). Second, calculate materials with markup by multiplying the base material cost by 1.15 to account for the 15% markup ($2,400 × 1.15 = $2,760). Finally, add both components together for the total contract amount ($3,400 + $2,760 = $6,160).
Why the Other Options Are Wrong
Option A: $6,400
This answer ($6,400) likely results from incorrectly calculating the markup as 20% instead of 15%, or from adding $2,400 + $4,000 without proper markup calculation.
Option B: $6,000
This answer ($6,000) appears to result from either forgetting to apply the 15% markup on materials entirely, or from miscalculating one of the components.
Memory Technique
Remember 'LM-TM': Labor + Materials = Time & Materials total. For markup, think '1 + the decimal' (15% = 1.15, 20% = 1.20, etc.) to avoid the common error of just adding the percentage.
Reference Hint
Florida Building Contractor Reference Manual - Chapter on Contract Types and Pricing Methods, specifically the section covering Time and Materials contracts
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
Related Study Resources
Previous Question
A contractor receives a $500,000 progress payment with 10% retainage held. If the contractor's overhead and profit margin is 15% and material costs for this billing period were $200,000, what is the total amount of retainage being held?
Next Question
A framing crew of 4 carpenters can frame 1,200 square feet per day. If carpenters earn $28 per hour for an 8-hour day, what is the labor cost per square foot for framing?