Question

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.
a. Profit or loss (dollars) $
b. Profit or loss (percentage) %
2. Express labor plus overhead as a percentage of total costs.
%

Answer 1

Answer:

1. a. $3,750

b. 12.5%

2. 90.48%

Explanation:

1. The computation of profit or loss in dollars and percentage is shown below:-

a. Total cost = Total direct labor cost + Other direct costs + (Total direct labor cost × Overhead percentage)

= $9,500 + $2,500 + ($9,500 × 150%)

= $26,250

Profit or (loss) is

= Bid amount - Total cost

= $30,000 - $26,250

= $3,750

Profit or loss percentage is

= Profit or (loss) × 100 ÷ Bid amount

= $3,750 × 100 ÷ $30,000

= 12.5%

2) Percentage is

= Total direct labor cost + Total direct labor cost × Overhead percentage × 100 ÷ Total cost

= ($9,500 + $9,500 × 1.5) × 100 ÷ $26,250

= 90.48%