Whang Construction Company is a general contractor that specializes in custom residential housing. Each job requires a bid that includes Whang's direct costs and subcontractor costs as well as an amount referred to as “overhead and profit.” Whang's bidding policy is to estimate the costs of direct materials, direct labor, and subcontractors' costs. These are totaled, and a markup is applied to cover overhead and profit. In the coming year, the company believes it will be the successful bidder on 10 jobs with the following total revenues and costs: Revenue $8,553,660 Direct materials $2,281,000 Direct labor 1,937,00
Markup on Cost, Cost-Based Pricing
Whang Construction Company is a general contractor that specializes in custom residential housing. Each job requires a bid that includes Whang's direct costs and subcontractor costs as well as an amount referred to as “
| Revenue | $8,553,660 | ||
| Direct materials | $2,281,000 | ||
| Direct labor | 1,937,000 | ||
| Subcontractors | 3,488,000 | 7,706,000 | |
| Overhead and profit | $847,660 |
Required:
1. Given the preceding information, what is the markup percentage on total direct costs?
fill in the blank 1 %
2. Suppose Whang is asked to bid on a job with estimated direct costs of $560,000. What is the bid?
$fill in the blank 2
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