Nordholm Construction Company builds houses.Each job requires a bid.Nordholm's bidding policy is to estimate the costs of materials,direct labour,and subcontractor's costs.These are totalled and a markup is applied to cover overhead and profit.In the coming year,Nordholm believes it will be the successful bidder on ten jobs with the following total revenues and costs:
$\begin{array}{lr}
\text { Revenues } && \$ 648,000 \
\text { Materials } &\$ 200,000 \
\text { Direct labour } & 250,000 \
\text { Subcontractors } &150,000&600,000 \
\text { Residual } &&\$48,000
\end{array}$ The residual will cover overhead and profits.
a.What is the markup percentage on total direct costs?
b.Suppose Nordholm is asked to bid on a job with estimated direct costs of $55,000.What is the bid? If the customer complains that the profit seems high,how might Nordholm counter that?

Question

Nordholm Construction Company builds houses.Each job requires a bid.Nordholm's bidding policy is to estimate the costs of materials,direct labour,and subcontractor's costs.These are totalled and a markup is applied to cover overhead and profit.In the coming year,Nordholm believes it will be the successful bidder on ten jobs with the following total revenues and costs:
 $\begin{array}{lr}
\text { Revenues } && \$ 648,000 \
\text { Materials } &\$ 200,000 \
\text { Direct labour } & 250,000 \
 \text { Subcontractors } &150,000&600,000 \
\text { Residual } &&\$48,000
\end{array}$ The residual will cover overhead and profits. 
a.What is the markup percentage on total direct costs?
b.Suppose Nordholm is asked to bid on a job with estimated direct costs of $55,000.What is the bid? If the customer complains that the profit seems high,how might Nordholm counter that?

Quizplus · Accepted Answer

The Answer of Nordholm Construction Company builds houses.Each job requires a bid.Nordholm's bidding policy is to estimate the costs of materials,direct labour,and subcontractor's costs.These are totalled and a markup is applied to cover overhead and profit.In the coming year,Nordholm believes it will be the successful bidder on ten jobs with the following total revenues and costs:
 $\begin{array}{lr}
\text { Revenues } && \$ 648,000 \
\text { Materials } &\$ 200,000 \
\text { Direct labour } & 250,000 \
 \text { Subcontractors } &150,000&600,000 \
\text { Residual } &&\$48,000
\end{array}$ The residual will cover overhead and profits. 
a.What is the markup percentage on total direct costs?
b.Suppose Nordholm is asked to bid on a job with estimated direct costs of $55,000.What is the bid? If the customer complains that the profit seems high,how might Nordholm counter that?

Nordholm Construction Company Builds Houses The Residual Will Cover Overhead and Profits