bid/estimate calculations

Hey where do you go to school Kane?

im sorry i dont go to school i live in SC though

answers (d) none of the above

As I understand the question you want make to $150,000 profit on the job.

your cost to do the job will be 62%. That means that the 150k is 38% of the total bill

(150000/38)100 = $394,736.84

Let BP = Bid Price, DC = Direct Cost and P = Profit

Then:

1. BP = DC + P
2. DC = 0.62*BP
3. BP = 0.62*BP + P
4. 0.38*BP = P = $150,000
5. BP = $394,736.84

So I agree with ozzb. But it really depends on how you define your terms.

Generally, revenue is income, not profit; profit is what is left after expenses are subtracted from revenue. The OP phrase "anticipated increase in revenue" leads me to believe that some information is missing - increase over what? I cannot arrive at the "correct" answer through any sensible manipulation of the given numbers.

what additional information would youneed to arrive at the answer ????

Perhaps what amount the revenue is being increased from???

Yeah, you got it. If you want revenue of $150k, the bid is $150k. Unless you live in western PA.; then the bid is $400k: $150k for you and $250k kickbacks.

The whole question is arse about face...

The way things should work is... you work out the cost in material, time, labour and overheads add a reasonable percentage mark up to cover re-investment, depreciation and a modest proffit and thats the price....

Whoops, sorry being naive again

From some one who emits he not and accountant.

Yes... but there again I don't really s'pose you want me to go into a diatribe about how I realise that price is indeed a flexible concept..and the 'list price' for a 'one off' isn't the same as the 50 off batch price you give to your regular customers...

Or how it may be expedient to make as much profit as possible at start up, for fear of cut price competition later? Or blah blah blah....

I did say I was being naive.. or maybe I misconstrue the tone of your enigmatic response?

Whatever.. the point I was trying to make, however badly, is...

I don't see how it makes any sense at all to decide on a profit and work backwards from that. It is nonsense unless the other factors are taken into account....

$1000 dollars profit is great ... if the job took you a day and you had no outlay...
Not so good if it took 2 weeks.

Bugger I've now wasted more of my precious time than this thread is worth...no profit in that

Del

I have to agree with Del,

There are so many variables to calculate. It boils down to how much you want to make ($/hr). you need your fixed and variable overhead, material mark up and transportation charges etc. Then we can talk!

The market determines sales price. Its up to engineers to reduce the cost to achieve a "nice" profit.