Todd Griffin, the owner of Griffin Landscaping, is preparing a bid for Max and Martha Zimmer. Todd expects that the job will require $2,800 of direct materials, $2,200 of direct labor, and $1,700 of overhead costs. Selling and administrative expenses for the job are expected to be $600. On average, last year Todd earned about $3,000 profit on a job this size and would like to increase the profit by 5% on new contracts. He normally applies a markup on cost of goods sold to arrive at an initial bid price and then adjusts the price as necessary in order to meet competitors' prices. Max and Martha already have one bid from a national nursery chain to do the job for $8,000.

Required:

A.Calculate the markup percentage for the new job.

B.What is Todd's initial bid?

In light of the competitor's price of $8,000, what would you recommend as a bid price for Todd? Why?