Business FinancesQuestion 1176 of 1605
A contractor's total direct cost on a remodel is $22,500. He wants a 20% profit margin on the selling price. What price should he charge?
a.$26,500
b.$27,000
c.$28,125
d.$27,562
Explanation
For a target margin, divide cost by (1 - margin): $22,500 / (1 - 0.20) = $22,500 / 0.80 = $28,125. Profit = $28,125 - $22,500 = $5,625, which is 20% of $28,125.
Practice all 1605 questions free — no signup required.
Related questions on this topic
- A city business license (business tax certificate) is:
- A building permit for a construction project is generally obtained from:
- A contractor who performs work requiring a license without being properly licensed at all times during the project:
- A contractor marks up a $4,000 material cost by 45%. What is the selling price of the materials?
- A job priced at $9,600 carried a 20% markup on cost. What was the direct cost?
- Which markup on cost produces a 20% gross margin?
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)