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 your price?

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

2. Your overhead is 25% of your sales and you want 25% profit. What gross margin do you need?

50%25%33%75%

3. A client asks you to lower your price. What's the best response?

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

4. The job needs a bond that costs 1.5% of the contract price, and you price at a 50% margin. Which formula keeps your full margin?

Direct cost × 2, then add 1.5% of the costDirect cost × 1.515Direct cost × 2, plus a flat $1,500Direct cost ÷ (1 − 0.50 − 0.015)

5. What should the contingency in your price cover?

A fixed percentage added to every bidSpecific risks you've identified but can't exclude in writingUnknown slab moistureOverhead you forgot to include

Overhead, markup and margin

Covers