Utah Contractor Exam 2026 – 400 Free Practice Questions to Pass the Exam

Question: 1 / 770

What percentage of direct costs is used to calculate profit if the total is $7,200 and profit is set at 10%?

5%

12%

10%

In the context of calculating profit as a percentage of direct costs, the profit is determined based on the total direct costs incurred in a project. Here, the total amount is $7,200, and the desired profit margin is set at 10%.

To find the profit amount, you would multiply the total direct costs by the profit percentage. In this case, 10% of $7,200 equals $720, which represents the profit from the total direct costs. Setting the profit at 10% means that profit is calculated as a straightforward percentage of the direct costs without any adjustments or alterations.

Therefore, since profit directly reflects a portion of the total direct costs, stating that the profit amount represents 10% of the direct costs is accurate and aligns perfectly with the intended calculation strategy. This understanding is fundamental in scenarios where budgeting and financial planning are involved in contracting work.

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