Florida General Contractor Practice Exam 2025 - Free Contractor License Practice Questions and Study Guide

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If a contractor's bid for a job is $20,000 and their break-even point includes direct costs of 60%, selling expenses of 22.5%, and fixed overhead of $4,000, how much additional amount should be added to the bid to reach the break-even point?

$7,500

To determine the additional amount that needs to be added to the bid to reach the break-even point, we first need to calculate the total costs associated with the job. The bid amount is $20,000, and the components of the break-even point include direct costs, selling expenses, and fixed overhead.

1. **Calculate Direct Costs**: Since direct costs make up 60% of the bid, we find that:

\[

\text{Direct Costs} = 60\% \times 20,000 = 12,000

\]

2. **Calculate Selling Expenses**: Selling expenses account for 22.5% of the bid, leading to:

\[

\text{Selling Expenses} = 22.5\% \times 20,000 = 4,500

\]

3. **Add Fixed Overhead**: The fixed overhead is given as $4,000.

Now, we can sum these costs to find the total costs:

\[

\text{Total Costs} = \text{Direct Costs} + \text{Selling Expenses} + \text{Fixed Overhead} = 12,000 + 4,500 + 4,000 =

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$9,000

$12,000

$8,500

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