Utah Contractor Practice Exam

What should be the correct bid price for Frank's job if he plans to make 9% profit and has a direct cost of $1,000?

1. $1,135

2. $1,268

3. $1,515

4. $1,881

The correct answer is: $1,515

To determine the correct bid price for Frank's job, given the direct cost of $1,000 and the desired profit margin of 9%, you need to calculate the total bid price that includes both the direct cost and the profit. First, calculate the amount of profit Frank wants to make from the job. This is done by taking the direct cost and multiplying it by the profit percentage: Profit = Direct Cost × Profit Percentage Profit = $1,000 × 0.09 Profit = $90 Now, to find the total bid price that Frank should charge, you add the profit to the direct cost: Total Bid Price = Direct Cost + Profit Total Bid Price = $1,000 + $90 Total Bid Price = $1,090 However, this outcome does not match the answers provided, indicating that perhaps the calculation involves an additional factor for pricing, such as markup. In many cases, the bid price is calculated by considering the cost as a percentage of the total price. The formula used often is: Bid Price = Cost / (1 - Profit Margin) In this case, it would look like this: Bid Price = $1,000 / (1 - 0.09) Bid