Business FinancesQuestion 297 of 1605
A contractor wants a 20% gross margin on the SELLING price. If the job costs $48,000, what must the selling price be?
a.$57,600
b.$58,500
c.$60,000
d.$54,000
Explanation
When margin is based on selling price, Selling Price = Cost ÷ (1 − Margin) = $48,000 ÷ (1 − 0.20) = $48,000 ÷ 0.80 = $60,000. Note this differs from simply adding 20% to cost.
Practice all 1605 questions free — no signup required.
Related questions on this topic
- A contractor has current assets of $90,000 and current liabilities of $60,000. What is the working capital?
- A contractor completes a job with a contract price of $120,000 and total job costs of $90,000. What is the gross profit?
- A contractor sells a job for $200,000 with total job costs of $150,000. What is the gross profit MARGIN as a percentage of the selling price?
- A contractor applies a 25% markup on cost. Expressed as a margin on the selling price, this 25% markup equals approximately:
- A contractor's annual overhead is $120,000 and the company expects $600,000 in direct job costs for the year. What overhead rate, as a percentage of direct costs, should be applied to each job?
- A contractor's direct job costs are $70,000. The overhead rate is 15% of direct costs, and the contractor wants a 10% profit on the total of direct costs plus overhead. What is the bid price?
Last reviewed: · editorial process
Sen Lin, PrepPass Founder · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)