A contractor is offered $120,000 for a job requiring $10,000 in equipment, $30,000 in labor, and $60,000 in materials. Considering over-head (20% labor) and gross overhead (10% on labor and materials), what is the contractor's profit or loss?

To determine the contractor's profit or loss, it's essential to accurately calculate total costs and then compare them to the offered job amount.

First, let's identify the costs involved in the job:

1. Equipment costs: $10,000

2. Labor costs: $30,000

3. Material costs: $60,000

Next, we need to calculate overhead. The overhead is comprised of two components: 20% on labor and gross overhead calculated as 10% of labor and materials combined.

For the labor overhead:

• 20% of $30,000 = $6,000

For the gross overhead on labor and materials:

• Total of labor and materials = $30,000 + $60,000 = $90,000

• 10% of $90,000 = $9,000

Now, summing up all costs including overhead:

Total costs = Equipment + Labor + Materials + Labor Overhead + Gross Overhead

Total costs = $10,000 + $30,000 + $60,000 + $6,000 + $9,000 = $115,000

The contractor is receiving $120,000 for the job. To find the profit, we decrease the total income