A $25,000 appliance allowance is reconciled to an approved actual cost of $31,000. The contract allows 10 percent markup on allowance overruns. What additive change is due?
Correct Answer
B) $6,600
Approved overrun = $31,000 − $25,000 = $6,000. Add the stated 10% markup on that overrun: $6,000 + $600 = $6,600. $3,100 is only 10% of the full actual cost; $6,000 omits markup; $56,000 incorrectly adds the allowance to actual cost.
Why This Is the Correct Answer
Approved overrun = $31,000 − $25,000 = $6,000. Add the stated 10% markup on that overrun: $6,000 + $600 = $6,600. $3,100 is only 10% of the full actual cost; $6,000 omits markup; $56,000 incorrectly adds the allowance to actual cost.
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On the supplied schematic practice drawing (E-720), what is the sum of the three printed chain dimensions? Use the dimension labels rather than scaling the sloping graphic.
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