Question: A firm is preparing a fixed price proposal that has a subcontractor. The subcontractor estimates their cost at $110,000, plans to add a reserve of

A firm is preparing a fixed price proposal that has a subcontractor. The subcontractor estimates their cost at $110,000, plans to add a reserve of 6.0%, and on top of that a markup of 16.0%. The firm estimates their direct cost excluding the subcontract at 200,000 with no reserve.

a. What is the total cost that the subcontractor seeks for their project work?

b. If the firm adds a markup of 15.0% to total cost including the total amount it is obligated to pay the subcontractor what is the total price in the proposal?

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