Contracts & ExecutionQuestion 155 of 690
A contractor needs a 25% gross margin on a job. If the direct costs are $30,000, what selling price achieves that margin?
a.$37,500
b.$40,000
c.$45,000
d.$24,000
Explanation
To find the price for a desired margin, divide cost by (1 - margin): $30,000 / (1 - 0.25) = $30,000 / 0.75 = $40,000. The $10,000 profit is 25% of the $40,000 price.
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