Quick Construct builds custom, high-end homes. Each home requires a bid, and Quicks bidding practise is to
Question:
Quick Construct builds custom, high-end homes. Each home requires a bid, and Quick’s bidding practise is to estimate the costs of materials, direct labour and subcontracting fees. These are totalled and markup is applied to cover overhead and profit. In the next year, Quick believes it will be the successful bidder on 10 jobs with the following total revenues and costs:
Revenues $648,000
Materials $200,000
Direct labour $250,000
Subcontractors $150,000 $600,000
Excess $48,000
Required
a) What is the markup percentage on total direct costs?
b) If Quick is asked to bid on a job with estimated direct costs of $55,000, what is the amount of the total bid? If the customer complains that the profit is too high, how might Quick counter that comment?
Auditing & Assurance Services
ISBN: 978-1260703733
8th Edition
Authors: Timothy Louwers, Penelope Bagley, Allen Blay, Jerry Strawser, Jay Thibodeau