Corlis Construction Company builds houses. Each job requires a bid. Corlis' bidding policy is to estimate the costs of materials, direct labor, and subcontractor's costs. These are totaled and a markup is applied to cover overhead and profit. In the coming year, Corlis believes it will be the successful bidder on ten jobs with the following total revenues and costs:
The residual will cover overhead and profits.
Required:
a. What is the markup percentage on total direct costs?
b. Suppose Corlis is asked to bid on a job with estimated direct costs of $57,500. What is the bid? If the customer complains that the profit seems pretty high, how might Corlis counter that?

Question

Corlis Construction Company builds houses. Each job requires a bid. Corlis' bidding policy is to estimate the costs of materials, direct labor, and subcontractor's costs. These are totaled and a markup is applied to cover overhead and profit. In the coming year, Corlis believes it will be the successful bidder on ten jobs with the following total revenues and costs:
  The residual will cover overhead and profits.
Required: 
a. What is the markup percentage on total direct costs?
b. Suppose Corlis is asked to bid on a job with estimated direct costs of $57,500. What is the bid? If the customer complains that the profit seems pretty high, how might Corlis counter that?

Quizplus · Accepted Answer

The Answer of Corlis Construction Company builds houses. Each job requires a bid. Corlis' bidding policy is to estimate the costs of materials, direct labor, and subcontractor's costs. These are totaled and a markup is applied to cover overhead and profit. In the coming year, Corlis believes it will be the successful bidder on ten jobs with the following total revenues and costs:
  The residual will cover overhead and profits.
Required: 
a. What is the markup percentage on total direct costs?
b. Suppose Corlis is asked to bid on a job with estimated direct costs of $57,500. What is the bid? If the customer complains that the profit seems pretty high, how might Corlis counter that?

Corlis Construction Company Builds Houses