Cost-plus pricing for job quotation

Steps:

• Calculate overheads as 50% of direct labour cost: 0.5 × $3000 =$1500.
• Calculate total cost: direct materials + direct labour + overheads = $2000 +$3000 + $1500 =$6500.
• Calculate profit as 20% of total cost: 0.2 × $6500 =$1300.
• Calculate total quotation: total cost + profit = $6500 +$1300 = $7800.

Why D is correct:

• D applies the cost-plus pricing formula, where quotation = total production cost × (1 + profit rate), ensuring recovery of all costs plus markup.

Why the others are wrong:

• A omits overheads and profit, underquoting the job.
• B includes costs but omits profit markup.
• C adds insufficient profit to total cost.

Final answer: D