Cost-Based Pricing Decision

Jeremy Costa, owner of Costa Cabinets Inc., is preparing a bid on a job that requires $2,160 of direct materials, $1,944 of direct labor, and $1,620 of overhead. Jeremy normally applies a standard markup based on cost of goods sold to arrive at an initial bid price. He then adjusts the price as necessary in light of other factors (e.g., competitive pressure). Last year's income statement is as follows:

Line Item Description	Amount
Sales	$188,500
Cost of goods sold	86,710
Gross margin	$101,790
Selling and administrative expenses	46,300
Operating income	$55,490

Required:

1. Calculate the markup that Jeremy will use. Round your answer to one decimal place. fill in the blank 1 of 2 %

2. What is Jeremy's initial bid price? Round your answer to the nearest dollar. fill in the blank 2 of 2$