Business FinancesQuestion 1114 of 1605
Overhead costs are best described as:
a.Ongoing business costs not directly chargeable to a single job
b.Costs that vary directly with the size of each job
c.Only the cost of materials
d.The same as net profit
Explanation
Overhead (indirect costs) are the ongoing costs of running the business, such as rent, office staff, insurance, and vehicles, that cannot be charged directly to any one job. They must be spread across all jobs and recovered through markup.
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Related questions on this topic
- A contractor's annual overhead is $120,000 and he expects $600,000 in direct job costs this year. What overhead rate should he add to each job's direct cost to recover overhead?
- Which of the following is an example of OVERHEAD (indirect cost) rather than a direct job cost?
- A contractor's job has $10,000 direct costs. He adds 15% for overhead and then 10% profit on the resulting subtotal. What is the final price?
- A contractor completes $800,000 in revenue with $560,000 direct costs and $160,000 overhead. What is the net profit and net profit margin?
- If a contractor underestimates his overhead rate when bidding, the most likely result is:
- A contractor has fixed costs of $90,000 per year. His contribution margin (price minus variable cost) is 30% of revenue. What annual revenue does he need to break even?
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