Cost-Based Pricing Decision

Jeremy Costa, owner of Costa Cabinets Inc., is preparing a bid on a job that requires $2,430 of direct materials, $2,187 of direct labor, and $1,458 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 years income statement is as follows:

Sales		$195,000
Cost of goods sold		81,900
	Gross margin	$113,100
Selling and administrative expenses		46,300
	Operating income	$66,800

Required:

1. Calculate the markup that Jeremy will use. Round your answer to one decimal place. %

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