A contract allows 10 percent overhead and then 5 percent profit on a $18,000 direct-cost change. If profit is applied after overhead, what total proposal amount results?
Correct Answer
A) $20,790
Overhead subtotal is $18,000 x 1.10 = $19,800. Profit after overhead is $19,800 x 1.05 = $20,790. Other choices omit profit, add simple percentages incorrectly, or round to an unsupported amount.
Why This Is the Correct Answer
Overhead subtotal is $18,000 x 1.10 = $19,800. Profit after overhead is $19,800 x 1.05 = $20,790. Other choices omit profit, add simple percentages incorrectly, or round to an unsupported amount.
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