Question: A firm is preparing a fixed price proposal that includes a subcontractor who estimate their cost to be 110,000. The subcontractor plans to add a

A firm is preparing a fixed price proposal that includes a subcontractor who estimate their cost to be 110,000. The subcontractor plans to add a reserve of 6.0% and on top of that a markup of 15.0%. The firm estimates their direct cost excluding the subcontract to be 210,000 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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