MHIC Contracts and Estimating 5

Question 1

When calculating overhead costs in a job estimate, which of the following is an example of a fixed overhead expense?

Accepted Answer

Office rent

Answer

Fixed overhead expenses like office rent remain constant regardless of the number of projects, unlike direct job costs.

Question 2

Under Maryland regulations, which of the following must a home improvement contract include regarding payment schedule?

Accepted Answer

A clear payment schedule tied to project milestones or dates

Answer

Maryland home improvement contracts must specify a payment schedule, and law limits deposits to protect homeowners from contractors who collect money and disappear.

Question 3

A contractor uses the cost-plus pricing method. This means the customer pays:

Accepted Answer

The actual cost of materials and labor plus a fixed fee or percentage markup

Answer

Cost-plus contracts pass through actual project costs to the owner and add an agreed markup for overhead and profit.

Question 4

A liquidated damages clause in a construction contract typically specifies:

Accepted Answer

A pre-agreed dollar amount the contractor owes the homeowner for each day the project is delayed past the completion date

Answer

Liquidated damages clauses set a predetermined daily penalty for project delays, replacing the need to prove actual damages.

Question 5

Which Maryland statute primarily governs home improvement contracts and licensing requirements for contractors?

Accepted Answer

Maryland Home Improvement Law (Business Regulation Article, Title 8)

Answer

The Maryland Home Improvement Law, codified in the Business Regulation Article, Title 8, governs contractor licensing and contract requirements.

(MHIC) Maryland Home Improvement Contractor Practice Test

(MHIC) Maryland Home Improvement Contractor Practice Test

MHIC Contracts and Estimating 5