A directed change uses rented drying equipment for 4 days at $650 per day. The contract allows 15 percent markup on equipment cost. What equipment amount should be proposed?
Correct Answer
A) $2,990
Base equipment cost is 4 x $650 = $2,600. With 15% markup, the proposal amount is $2,600 x 1.15 = $2,990. Other choices omit markup or use unsupported amounts.
Why This Is the Correct Answer
Base equipment cost is 4 x $650 = $2,600. With 15% markup, the proposal amount is $2,600 x 1.15 = $2,990. Other choices omit markup or use unsupported amounts.
Why the Other Options Are Wrong
Option B: $2,600
equipment markup, choice a: $2,600 stops after base equipment cost is 4 x 650 = 2600 and omits the final step to $2,990.
Option C: $2,750
equipment markup, choice b: $2,750 applies only part of the markup/burden sequence or applies it to the wrong subtotal.
Option D: $3,250
equipment markup, choice c: $3,250 applies only part of the markup/burden sequence or applies it to the wrong subtotal.
Memory Technique
Picture a tag labeled equipment markup: finish every operation before accepting $2,990.
Reference Hint
Open NASCLA Contractors Guide to Business, Law and Project Management, 14th Ed.; use the index entry or section for "Change proposal equipment markup" to confirm that Base equipment cost is 4 x $650 = $2,600.
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