In a Time and Materials (T&M) contract with a labor rate of $85/hour and materials at cost plus 15%, what is the total billing for 40 hours of work and $2,500 in materials?
Correct Answer
B) $6,275
Labor: 40 hours × $85/hour = $3,400. Materials: $2,500 × 1.15 = $2,875. Total: $3,400 + $2,875 = $6,275.
Why This Is the Correct Answer
$6,275 is correct. Labor: 40 hours × $85/hr = $3,400. Materials: $2,500 × 1.15 = $2,875. Total: $3,400 + $2,875 = $6,275.
Why the Other Options Are Wrong
Option A: $6,375
$6,375 is incorrect — this results from a $100 arithmetic error, possibly computing materials as $2,500 × 1.15 = $2,975 (wrong) or applying the wrong markup percentage.
Option C: $6,175
$6,175 is incorrect — this is $100 less than the correct answer, possibly from computing materials at cost plus 10% ($2,750) instead of plus 15% ($2,875), or another arithmetic error.
Option D: $6,475
$6,475 is incorrect — this is $200 more than the correct answer, likely from applying a 20% markup to materials ($3,000) instead of 15% ($2,875), or double-counting a cost element.
Memory Technique
Two buckets: LABOR bucket = hours × rate. MATERIALS bucket = cost × (1 + markup%). Add the two buckets together. For this problem: $3,400 + $2,875 = $6,275.
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