CSLB Contractor's Law & Business Practice Exam

To determine the selling price, you first need to account for the direct costs, overhead, and profit based on those costs.

Start with the direct costs, which are given as $7,200. From there, you need to calculate the overhead, which is 12% of the direct costs. To find this, multiply the direct costs by the overhead percentage:

Overhead = $7,200 * 12% = $7,200 * 0.12 = $864.

Now, add the overhead to the direct costs to find the total costs:

Total costs = Direct costs + Overhead = $7,200 + $864 = $8,064.

Next, you need to calculate the profit, which is 10% of the total costs. To find this, multiply the total costs by the profit percentage:

Profit = Total costs * 10% = $8,064 * 0.10 = $806.40.

Finally, add the profit to the total costs to arrive at the selling price:

Selling price = Total costs + Profit = $8,064 + $806.40 = $8,870.40.

However, because there is a slight error in the estimate due to rounding and calculations involving percentages