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You’re a contractor and the owner of a one-man remodeling operation called Hammer and Nail Remodeling. You’ve had a fairly successful three years in business, but you’ve noticed that business is showing some evidence of decline this year.

The Quarterly Overhead Review in Figure 12-1 shows your company’s expenses during the first six months of this year. You completed $109,339 of work during the first quarter and $133,636 of work during the second quarter. The rise in sales from the first to second quarter of the year is fairly typical for your company.

Projected out over the year, you think that you’ll do about $485,950 for the year. Let’s see if we can put our finger on why business for your company may be off.

Questions:

A. Using the numbers from the second quarter (this quarter), what markup should your company be using?

B. Looking at the Quarterly Overhead Review, what steps could you take to reduce your overhead and lower your markup?

Answer

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