Contracts & ExecutionQuestion 193 of 1605
A contractor's overhead is best described as:
a.The direct labor and materials used on a specific job
b.Indirect business costs (office rent, insurance, administration) not charged to one specific job
c.The profit earned on the most recent job
d.The amount of retention withheld by the owner
Explanation
Overhead consists of indirect costs of running the business — office, insurance, licenses, administrative salaries — that benefit all jobs and must be recovered through markup on direct costs.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)