Exercise 9-2 Computing Profit or Loss on a Bid Sebastian and Whitley, plumbers,

Question

Exercise 9-2
Computing Profit or Loss on a Bid

Sebastian and Whitley, plumbers, successfully bid $30,000 for the plumbing work on a new luxury home. Total direct labor cost on the job was $9,500, other direct costs were $2,500, and overhead is charged to jobs at 150% of direct labor cost.

Round your answers to one decimal place, if necessary.

1. Compute the profit or loss on the job in (a) dollars and (b) as a percentage of the bid price.

2. Express labor plus overhead as a percentage of total costs.
  %

Explanation / Answer

1) Total cost = 9500+2500+(9500*150%) = 26250

Profit or (loss) = 30000-26250 = 3750

Profit or loss percentage = 3750*100/30000 = 12.5%

2) Percentage = (9500+9500*1.5)*100/26250 = 90.48%

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