Question: Calculate the amount of the final price adjustment because of defective pricing based on the following:
Contractor unintentionally overpriced their material costs by $75,000 and under-priced their direct manufacturing labor costs by $50,000. Overhead rates used to price the original contract are given below:
- Material OH 15%
- Engineering OH 75%
- Manufacturing OH 124%
- Lawn Maintenance OH 1.5%
- G&A 24%