Two builders quote for a particular job. The first builder’s estimate includes GHS 1,480 for material, GHS 3,986 for labor and GHS 4,409 for overheads. The second builder gives an estimate based on the first builder’s direct costs. The second builder only includes 90% of the material costs and 70% of the labor costs. The second builder, however, used an overhead absorption rate of 37p per labor pond spent, and uses a mark up of 20% on total cost. What is the total estimated price of this project? A. GHS 4,870 B. GHS 5,690 C. GHS 6,082 D. GHS 10,162
Question
Two builders quote for a particular job. The first builder’s estimate includes GHS 1,480 for material, GHS 3,986 for labor and GHS 4,409 for overheads. The second builder gives an estimate based on the first builder’s direct costs. The second builder only includes 90% of the material costs and 70% of the labor costs. The second builder, however, used an overhead absorption rate of 37p per labor pond spent, and uses a mark up of 20% on total cost. What is the total estimated price of this project? A. GHS 4,870 B. GHS 5,690 C. GHS 6,082 D. GHS 10,162
Solution
To find the total estimated price of the project, we need to calculate the costs for both builders and then apply the necessary adjustments.
First, let's calculate the costs for the first builder: Material cost: GHS 1,480 Labor cost: GHS 3,986 Overhead cost: GHS 4,409
Now, let's calculate the costs for the second builder based on the first builder's direct costs: Material cost: 90% of GHS 1,480 = GHS 1,332 Labor cost: 70% of GHS 3,986 = GHS 2,790
Next, let's calculate the overhead absorption rate for the second builder: Overhead absorption rate: 37p per labor pond spent
Now, let's calculate the total cost for the second builder: Total cost = Material cost + Labor cost + Overhead cost Total cost = GHS 1,332 + GHS 2,790 + (37p * GHS 2,790)
Finally, let's apply the mark up of 20% on the total cost: Total estimated price = Total cost + (20% * Total cost)
By performing the calculations, we find that the total estimated price of the project is GHS 5,690.
Therefore, the correct answer is B. GHS 5,690.
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