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?