Johnny Lopez Construction Company is a general contractor that specializes in customresidential housing. Each job requires a bid that includes Lopez's direct costs andsubcontractor costs as well as an amount referred to as "overhead and profit." Lopez'sbidding policy is to estimate the costs of direct materials, direct labor, andsubcontractors'costs. These are totaled, and a markup is applied to cover overheadand profit. In the coming year, the company believes it will be the successful bidderon 10 jobs with the following total revenues and costs:RevenueP8,740,000Direct materialsP2,250,0001,900,0003,450,000Direct laborSubcontractors7,600,000PL140.000Overhead and profitRequired:1. Given the preceding information, what is the markup percentage ontotal direct costs?2. Suppose Lopez is asked to bid on a job with estimated direct costs ofP 750,000. What is the bid? If the customer complains that the profitseems pretty high, how might Lopez counter that accusation?

Bid price is the estimated cost to be changed the bid price includes the estimated direct cost and…

Johnny Lopez Construction Company is a general contractor that specializes in custon residential housing. Each job requires a bid that includes Lopez's direct costs an subcontractor costs as well as an amount referred to as "overhead and profit." Lopez bidding policy is to estimate the costs of direct materials, direct labor, an subcontractors'costs. These are totaled, and a markup is applied to cover overhea and profit. In the coming year, the company believes it will be the successful bidde on 10 jobs with the following total revenues and costs: Revenue P8,740,000 Direct materials P2,250,000 Direct labor 1.900.000

Johnny Lopez Construction Company is a general contractor that specializes in custon residential housing. Each job requires a bid that includes Lopez's direct costs an subcontractor costs as well as an amount referred to as "overhead and profit." Lopez bidding policy is to estimate the costs of direct materials, direct labor, an subcontractors'costs. These are totaled, and a markup is applied to cover overhea and profit. In the coming year, the company believes it will be the successful bidde on 10 jobs with the following total revenues and costs: Revenue P8,740,000 Direct materials P2,250,000 Direct labor 1.900.000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 13E

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