In a bid where overhead and profit are applied as percentages of the selling price, what combined percentage do overhead and profit represent of the selling price?

In a bid where overhead and profit are applied as percentages of the selling price, what combined percentage do overhead and profit represent of the selling price?

• A. 12%
• B. 17%
• C. 22%
• D. 25%

Answer: (B)

When overhead and profit are both applied as percentages of the selling price, you simply add those percentages together to get their combined share of the selling price. If overhead is 10% of the selling price and profit is 7% of the selling price, their total is 17% of the selling price. So the combined overhead and profit represent 17% of the selling price. If the percentages were different, you’d just add them in the same way. This approach differs from applying overhead and profit as percentages of cost, which would require a different calculation.

When overhead and profit are both applied as percentages of the selling price, you simply add those percentages together to get their combined share of the selling price. If overhead is 10% of the selling price and profit is 7% of the selling price, their total is 17% of the selling price. So the combined overhead and profit represent 17% of the selling price. If the percentages were different, you’d just add them in the same way. This approach differs from applying overhead and profit as percentages of cost, which would require a different calculation.