Given a company's previous revenues of $500,000 and overhead of $115,000, what should be the bid price for a project with $80,000 in direct costs if aiming for a 10% profit?

To calculate the bid price for a project while aiming for a specific profit margin, you'll want to consider both the direct costs associated with the project and the desired profit.

In this case, the direct costs of the project are $80,000. If the company aims for a 10% profit on the total bid price, we can set up the calculation to find the bid price.

Let’s denote the bid price as ( P ). To achieve a 10% profit, the profit needs to be calculated as 10% of ( P ), which is ( 0.10P ). Therefore, the total costs (direct costs plus any applicable overhead) must equal ( P - 0.10P ), simplifying to ( 0.90P ).

Adding the direct costs and overhead gives us the total cost:

• Direct costs: $80,000

• Overhead: $115,000

• Total costs = $80,000 + $115,000 = $195,000

Now we equate the total costs to 90% of the bid price:

[

0.90P = 195,000

]

To find ( P ), rearranging gives:

[

P =