What is the appropriate bid range if a contractor has a combined profit and overhead of 33% on specified unit costs?

What is the appropriate bid range if a contractor has a combined profit and overhead of 33% on specified unit costs?

• A. $40,000 - $45,000
• B. $50,000 - $55,000
• C. $45,000 - $50,000
• D. $60,000 - $65,000

Answer: (C)

To understand why the bid range of $45,000 to $50,000 is the appropriate choice given a combined profit and overhead of 33%, it is essential to explore how to calculate the bid based on unit costs and the markup for profit and overhead. When a contractor has a specified unit cost, the total price must account for both the direct costs of providing the service or product as well as the additional percentage that covers overhead and profit. A combined profit and overhead of 33% means that for every dollar spent on the base cost, the contractor is expecting an additional 33 cents for profit and overhead. To determine the bid range, we start with a base cost and apply the 33% markup. This can be represented mathematically as follows: 1. Let’s denote the base cost as \( C \). 2. The total bid price would then be calculated as \( C + (0.33 \times C) \) or \( 1.33C \). If we consider a scenario where the base cost is within a range that, when multiplied by 1.33, results in a price within the given bid ranges. For example: - If base cost \( C \) is around $33,834,

To understand why the bid range of $45,000 to $50,000 is the appropriate choice given a combined profit and overhead of 33%, it is essential to explore how to calculate the bid based on unit costs and the markup for profit and overhead.

When a contractor has a specified unit cost, the total price must account for both the direct costs of providing the service or product as well as the additional percentage that covers overhead and profit. A combined profit and overhead of 33% means that for every dollar spent on the base cost, the contractor is expecting an additional 33 cents for profit and overhead.

To determine the bid range, we start with a base cost and apply the 33% markup. This can be represented mathematically as follows:

1. Let’s denote the base cost as ( C ).

2. The total bid price would then be calculated as ( C + (0.33 \times C) ) or ( 1.33C ).

If we consider a scenario where the base cost is within a range that, when multiplied by 1.33, results in a price within the given bid ranges.

For example:

• If base cost ( C ) is around $33,834,