Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Markup on Cost, Cost-Based Pricing Whang Construction Company is a general contractor that specializes in custom residential housing. Each job requires a bid that includes
Markup on Cost, Cost-Based Pricing Whang Construction Company is a general contractor that specializes in custom residential housing. Each job requires a bid that includes Whang's direct costs and subcontractor costs as well as an amount referred to as "overhead and profit." Whang's bidding policy is to estimate the costs of direct materials, direct labor, and subcontractors' costs. These are totaled, and a markup is applied to cover overhead and profit. In the coming year, the company believes it will be the successful bidder on 10 jobs with the following total revenues and costs: Revenue Direct materials Direct labor $2,244,000 1,732,000 $8,392,600 Subcontractors Overhead and profit Required: 3,259.000 7,235,000 $1,157,600 1. Given the preceding information, what is the markup percentage on total direct costs? 2. Suppose Whang is asked to bid on a job with estimated direct costs of $557,000. What is the bid? 3. Briefly explain how Whang Construction's accountant might utilize data analytics to help decide on the markup percentage to use in setting prices. (see Exhibits 2.5 and 2.6, for a review of data analytics types.) However, one logical use of data analytics would be for the accountant to utilize analytics to assess the markup percentage applied by other similar companies in the industry
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started