Business FinancesQuestion 1234 of 1605
A contractor's markup covers overhead and profit. If direct costs are $80,000 and he applies a combined 25% O&P markup, the profit portion is $8,000 while overhead recovery is $12,000. What is the contract price and total O&P?
a.Price $100,000; O&P $20,000
b.Price $88,000; O&P $8,000
c.Price $105,000; O&P $25,000
d.Price $100,000; O&P $12,000
Explanation
Combined O&P markup = 25% x $80,000 = $20,000, split into $12,000 overhead recovery + $8,000 profit as stated. Price = $80,000 + $20,000 = $100,000. Total O&P added is $20,000.
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