Contracts & ExecutionQuestion 210 of 1605
A contractor wants to recover $96,000 of annual overhead and earn 8% net profit on sales. If projected annual sales are $800,000, the profit dollars expected are:
a.$8,000
b.$96,000
c.$104,000
d.$64,000
Explanation
Net profit equals the profit rate times sales: 8% x $800,000 = $64,000. Overhead recovery ($96,000) is separate; profit is what remains after both direct costs and overhead are covered.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)