Walters Inc. Walters Inc. power washes commercial and residential buildings. The

Question

Walters Inc. Walters Inc. power washes commercial and residential buildings. The company is preparing to bid on a competitive job involving a large commercial building. Walters estimates that the job will have the following costs: Direct materials $ 500 Direct labor 1,500 Overhead 400 Selling and administrative costs 200 Walters would like to earn a $1,600 profit on the job. The company applies a markup on cost of goods sold to arrive at an initial bid price. Refer to the Walters Inc. information above. What is the markup percentage on the above job? 38% 62% 75% 150%

Explanation / Answer

Direct materials = $ 500

Direct labor = 1,500

Overhead 400

Selling and adm 200

Total cost = 7100

Walters would like to earn a $1,600 profit on the job

Therefore markup = 1600 / 2600 *100 = 62%

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