What is the appropriate bid range if a contractor has a combined profit and overhead of 33% on specified unit costs?

To understand why the bid range of $45,000 to $50,000 is the appropriate choice given a combined profit and overhead of 33%, it is essential to explore how to calculate the bid based on unit costs and the markup for profit and overhead.

When a contractor has a specified unit cost, the total price must account for both the direct costs of providing the service or product as well as the additional percentage that covers overhead and profit. A combined profit and overhead of 33% means that for every dollar spent on the base cost, the contractor is expecting an additional 33 cents for profit and overhead.

To determine the bid range, we start with a base cost and apply the 33% markup. This can be represented mathematically as follows:

1. Let’s denote the base cost as ( C ).

2. The total bid price would then be calculated as ( C + (0.33 \times C) ) or ( 1.33C ).

If we consider a scenario where the base cost is within a range that, when multiplied by 1.33, results in a price within the given bid ranges.

For example:

• If base cost ( C ) is around $33,834,