A T&M material ticket includes $9,600 of approved materials. The contract allows 8 percent sales tax and 10 percent markup after tax. What material amount should be billed?
Correct Answer
D) $11,405
Material with tax is $9,600 x 1.08 = $10,368. Applying 10% markup after tax gives $10,368 x 1.10 = $11,404.80, or about $11,405. Other choices omit tax, use simple 20%, or use an unsupported rounded amount.
Why This Is the Correct Answer
Material with tax is $9,600 x 1.08 = $10,368. Applying 10% markup after tax gives $10,368 x 1.10 = $11,404.80, or about $11,405. Other choices omit tax, use simple 20%, or use an unsupported rounded amount.
Why the Other Options Are Wrong
Option A: $10,560
material markup, choice a: $10,560 is wrong because $10,560 applies only part of the markup/burden sequence or applies it to the wrong subtotal.
Option B: $11,520
material markup, choice b: $11,520 applies only part of the markup/burden sequence or applies it to the wrong subtotal.
Option C: $12,000
material markup, choice d: $12,000 is wrong because $12,000 applies only part of the markup/burden sequence or applies it to the wrong subtotal.
Memory Technique
Say the material markup rule aloud as a chain; the chain ends at $11,405, not an intermediate stop.
Reference Hint
Open NASCLA Contractors Guide to Business, Law and Project Management, 14th Ed.; use the index entry or section for "T&M material tax and markup" to confirm that Material with tax is $9,600 x 1.08 = $10,368.
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