You are a glass and glazing subcontractor considering whether or not to bid on a
ID: 1168218 • Letter: Y
Question
You are a glass and glazing subcontractor considering whether or not to bid on a job to do the windows work for an apartment complex project. You charge S500 for each window, with 80% of that going towards materials and labor, and 20% going towards overhead and profit. Your fixed costs, covering administrative costs, rent, management salaries, etc., total $100,000. At least how many windows do there need to be on the project for you to break even on this contract? If you can decrease your materials and labor costs to 78% of the window price, at least how many windows do you need to furnish and install to break even?Explanation / Answer
In order to break even, the 20% of the overhead and profit costs should be equal to $100,000
Since profit made on 1 window = 20% of $500 = $100
Thus, total windows required = $100,000/$100 = 1000 windows
Similarly, in the next case,
In order to break even, the 22% of the overhead and profit costs should be equal to $100,000
Since profit made on 1 window = 22% of $500 = $110
Thus, total windows required = $100,000/$110 = 909 windows
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