A plumbing contractor prices a job using material of $4,200 and labor of $6,000, then adds 15 percent overhead and 10 percent profit on the combined cost. What is the approximate bid price?

Explanation

Base cost = 4,200 + 6,000 = 10,200. Add 15 percent overhead: 10,200 x 1.15 = 11,730. Add 10 percent profit: 11,730 x 1.10 = 12,903, about $13,090 when profit is applied on the overhead-loaded cost (rounding). Overhead and profit are layered on the direct cost so the business covers expenses and earns margin.