What is the adjusted contract price for a change order that increases costs by $15,000 and $2,250 in overhead, while relieving $18,000 and $2,400 in costs, including a desired profit of 20%?

To determine the adjusted contract price based on the change order, you start by analyzing the financial impacts of the changes involved. The change order increases costs by $15,000 and additional overhead by $2,250. These increases amount to a total of $17,250 ($15,000 + $2,250).

On the other side, the change order also relieves some costs, specifically $18,000 and $2,400. This totals to $20,400 ($18,000 + $2,400) that can now be eliminated from the overall costs.

To find the net effect of the change order, you calculate the difference between the total relieving costs and the total increased costs:

Net effect = Relieved costs - Increased costs

Net effect = $20,400 - $17,250

Net effect = $3,150

The net effect indicates a financial relief of $3,150, indicating a reduction in the overall contract price. Adding the desired profit margin of 20% applies to the net reduction in costs, but in this case, the relief already produces a net decrease.

Thus, when accounting for the overall changes, the final adjusted contract price reflects a decrease of $3,780 instead of