Direct change cost is $18,500 and the allowed markup is 12%. What total change price results?
Correct Answer
A) $20,720
Markup is $18,500 x 12% = $2,220, so total is $18,500 + $2,220 = $20,720.
Why This Is the Correct Answer
Markup is $18,500 x 12% = $2,220, so total is $18,500 + $2,220 = $20,720.
Why the Other Options Are Wrong
Option B: $2,220
change markup, choice a: $2,220 applies only part of the markup/burden sequence or applies it to the wrong subtotal.
Option C: $19,120
change markup, choice c: $19,120 applies only part of the markup/burden sequence or applies it to the wrong subtotal.
Option D: $22,200
change markup, choice d: $22,200 applies only part of the markup/burden sequence or applies it to the wrong subtotal.
Memory Technique
Picture a release point labeled change markup: finish every operation before accepting $20,720.
Reference Hint
Open NASCLA Contractors Guide to Business, Law and Project Management, 14th Ed.; use the index entry or section for "change markup" to confirm that Markup is $18,500 x 12% = $2,220, so total is $18,500 + $2,220 = $20,720.
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