Pedro Costner has worked as a painter for years and has decided to go into...
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Pedro Costner has worked as a painter for years and has decided to go into business on his own as Pedro's Painting. Pedro's town is asking for bids on a project to paint the town hall, and Pedro plans to price the job using a 25% markup on project-related variable costs. Pedro wants to make sure he covers his costs and makes a profit. Pedro has gathered estimates of costs for the project. He must also consider the costs of owning his own business. His estimated costs are summarized in the following table: What will Pedro bid for the town hall project if he uses a 25% markup on project-related variable costs? What is Pedro's estimated profit on the town hall project if he wins with this bid? The town hall project will give Pedro a lot of exposure in town, and he wants to make sure that his pricing is competitive. Town records show that similarly sized painting projects did not exceed $8, 500, so Pedro is considering changing his bid. He will still aim for the same amount of profit and will budget his costs accordingly. Using this target pricing method, what will Pedro bid for the town hall project? _____ What is the target cost for the town hall project with this bid and Pedro's plan to achieve the same profit? _____
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