A contractor estimated that a project would cost ₹5,00,000. He planned for 60% of the cost to go to materials, 25% to labor, and the rest as contingency. However, due to delays, material cost increased by 12.5%, labor cost increased by 10%, and contingency remained unchanged. What is the new total cost?
Show answer & explanation
Correct answer: D
Explanation
Given:
Total Estimated Cost = 500,000
Materials = 60%
Labor = 25%
Contingencies = 15%
Material Cost = 60% of 500,000 = 300,000
New Material Cost = 300,000 × 112.5/100 = 337,500
Labor Cost = 25% of 500,000 = 125,000
New Labor Cost = 125,000 × 110/100 = 137,500
Contingencies = 15% of 500,000 = 75,000
New Total Cost = 337,500 + 137,500 + 75,000 = ₹550,000