Module 6 quiz: Overhead, markup and margin

1. A job's direct cost is $50,000 and you want a 50% gross margin. What's the price?

$75,000$100,000$55,000$150,000

2. Your overhead runs 25% of revenue and you want 25% profit. What gross margin do you need?

50%25%33%75%

3. A GC asks you to sharpen your pencil. What's the best response?

Match whatever number they ask forTake overhead out of the priceStay above your walk-away number, and trade price for scope, terms or fewer mobilizationsRefuse to talk about price

4. A job needs a bond priced at 1.5% of the contract, and you price at a 50% margin. Which keeps your true margin?

Cost × 2, then add 1.5% of costCost × 1.515Cost ÷ 0.50, plus a flat $1,500Cost ÷ (1 − 0.50 − 0.015)

5. What is contingency for?

Padding every bid by a fixed percentageSpecific, identified risks you can't qualify awayUnknown slab moistureOverhead you forgot to include

Overhead, markup and margin

Covers