A markup that covers BOTH overhead and profit is sometimes called:
Explanation
Contractors apply a single markup to direct cost to recover both overhead and the target profit, commonly written O&P; forgetting the overhead half is the classic way to bid a job that earns nothing. Contribution margin is revenue less variable cost and measures what a job contributes toward fixed cost, a related but different figure. Straight-line depreciation spreads an asset's cost over its life. Retention is money the owner withholds from payments and is not a markup at all.
This topic, taught in full in the CSLB Law & Business guide. CSLB Law & Business — Complete Study Guide (2026) — PDF + EPUB, $24.99 · 14-day refund →
Practice all 1632 questions free — no signup required.
Own the complete CSLB Law & Business guide — PDF + EPUB, $24.99 →
Related questions on this topic
- A change order adds $3,200 of direct cost to a job. If the contractor applies his standard 30% markup, how much should the change order add to the contract price?
- A written, signed change order is important because it:
- A contractor's equipment cost $18,000 and after 3 years of straight-line depreciation (6-year life, no salvage) its book value is:
- A contractor bills $75,000 on a job. The contract requires 5% retention and the owner also back-charges $1,500 for a utility relocation. How much will the contractor receive on this billing?
- Which is the best reason to separate business and personal bank accounts?
- A contractor's job had estimated direct costs of $40,000 but actual costs of $46,000. He bid a fixed price of $50,000. What was his actual gross profit?
Last reviewed: · editorial process