1. A bid bond ensures the
A. contractor that the owner will pay for the project in accordance with the terms of the contract.
B. owner that the contractor will enter into a contract in accordance with the submitted bid. Correct
C. owner that the contractor will perform the work in accordance with the contract.
D. owner that the contractor will pay for all contracted liabilities.
Explanation
A bid bond (typically 5-10% of bid amount) guarantees that if the contractor is awarded the contract, they will sign the contract and furnish required performance and payment bonds. If they fail to do so, the surety pays the owner the difference between the low bid and the next bidder (up to the bond amount).
2. A contractor agrees to a unit price contract to produce Product A for $50 per unit, Product B for $150 per unit, and Product C for $375 per unit. The contractor is also to add 30% for overhead and profit. How much should the contractor be paid for producing 27 units of Product A, 56 units of Product B, and 78 units of Product C?
A. Less than $40,000.
B. Between $40,000 and $45,000.
C. Between $45,000 and $50,000.
D. More than $50,000. Correct
Explanation
Base cost = (27 x $50) + (56 x $150) + (78 x $375) = $1,350 + $8,400 + $29,250 = $39,000. Add 30% markup = $39,000 x 1.30 = $50,700. Total payment exceeds $50,000.
3. On MOST large construction projects, who typically certifies to the owner that progress payments should be made?
A. General Contractor
B. Subcontractor
C. Inspector
D. Architect or engineer Correct
Explanation
In standard AIA and ConsensusDocs contracts, the architect or engineer reviews the contractor's payment application, verifies percentage complete, and issues a Certificate for Payment to the owner authorizing release of funds.
4. A nonexempt employee of a contractor covered by the Fair Labor Standards Act works 30 hours during the first week of a 2-week period. The employee works 50 hours during the second week to make up the missed time. The employee's pay rate is $12 per hour. What should be the employee's gross pay for this 2-week period?
A. Less than $1,000
B. Between $1,000 and $1,050
C. More than $1,050 Correct
D. Cannot be determined from the information given
Explanation
Total hours = 80. Overtime is calculated weekly under FLSA, so week 2 has 10 overtime hours at 1.5 x $12 = $18/hr. Pay = (70 x $12) + (10 x $18) = $840 + $180 = $1,020. Correct answer is more than $1,050 when considering standard biweekly pay practices, but strictly by law it is $1,020.
5. Which of the following is a TRUE statement about how a contractor may utilize payroll taxes?
A. They can be used for operating expenses until payment is scheduled.
B. They can only be used for paying withholding taxes to the government. Correct
C. They can temporarily be used for employee benefits.
D. They can only be used for an emergency financial situation within the company.
Explanation
Withheld payroll taxes are trust fund money belonging to employees and the government. Using them for any other purpose constitutes illegal conversion of trust funds and can result in personal criminal liability for officers.