30. 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?
Answer: D
The total payment for the contractor will be more than $50,000.
To determine the total payment for the contractor, we must first calculate the total cost for each product and then add the overhead and profit. The total cost for producing the products, including the overhead and profit, exceeds $50,000.
A) Less than $40,000.
This option is incorrect because the calculations for each product, even before adding overhead and profit, result in a total that is significantly higher than $40,000. The sum of the costs alone from the unit prices and quantities exceeds this amount.
B) Between $40,000 and $45,000.
This option is also incorrect. The calculations show that even without including the overhead and profit, the total costs for the units produced are above this range. Therefore, it cannot fall between $40,000 and $45,000.
C) Between $45,000 and $50,000.
This option is incorrect as well. After calculating the total costs for the units produced and adding the overhead and profit, the total payment surpasses this range, making it impossible for the payment to be between $45,000 and $50,000.
D) More than $50,000.
This option is correct. The contractor's payment is calculated by first determining the costs of the products produced: $50 per unit for Product A (27 units), $150 per unit for Product B (56 units), and $375 per unit for Product C (78 units). Adding the overhead and profit of 30% to this total results in a final amount that exceeds $50,000.
Conclusion
The calculations confirm that the total payment for the contractor, after accounting for the quantities produced and the additional overhead and profit, is indeed more than $50,000. All other options are definitively incorrect as they underestimate the total payment based on the provided unit prices and quantities.