Utah Contractor Practice Exam

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What is the gross selling price if direct costs are $38,000, overhead is 12%, and profit is 5% of the selling price?

$38,854.09
$42,964.11
$44,162.75
$45,783.13

The correct answer is: $45,783.13

To determine the gross selling price when given direct costs, overhead, and profit percentage relative to the selling price, follow these steps. First, recognize that the gross selling price comprises direct costs, overhead, and profit. In this scenario, direct costs equal $38,000. Overhead is 12% of the selling price, and profit is 5% of the selling price. Let the gross selling price be denoted as S. The overhead can be expressed as 0.12S, and the profit can be expressed as 0.05S. Therefore, the equation to represent the total costs can be formulated as: S = Direct costs + Overhead + Profit S = $38,000 + 0.12S + 0.05S S = $38,000 + 0.17S To solve for S, the selling price, first isolate S by moving the overhead and profit terms to one side: S - 0.17S = $38,000 0.83S = $38,000 Now, calculate S by dividing both sides by 0.83: S = $38,000 / 0.83 S ≈ $45,783.