Question 6:

Metro Boat Company produces custom-built houseboats. Metros house boats generally sell for prices between $85,000 and $125,000. Bob Smith, the football coach at State University, has presented Metro with the amenities he wishes to have on his boat. Metro has calculated that to build this boat to Bobs specifications, materials, labor and overhead would total $95,652. Bob does NOT want to pay more than $100,000. Metro normally prices their house boats based on the total cost of construction plus 15%. (50 Points)

Required (round to the nearest dollar):

a. What price would Metro normally quote for the houseboat Bob is requesting?

b. What is the target cost Metro would need to meet to sell the houseboat for $100,000 at a 15% markup?