Dynamite Co. has fixed manufacturing costs of $50,000, variable selling & admin costs of $10,000 and...

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Dynamite Co. has fixed manufacturing costs of $50,000, variable selling & admin costs of $10,000 and...

Dynamite Co. has fixed manufacturing costs of $50,000, variable selling & admin costs of $10,000 and breakeven sales of $500,000. What is its projected gross margin at $1,000,000 in sales?

business accounting

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Answer 1

Answer #1

Breakeven sales = fixed cost / contribution margin ratio
500000=50000/contribution margin ratio

contribution margin	10%
(50000/500000)

gross margin

Contribution	$ 100,000
(1000000*10%)
less:fixed cost	$ 50,000
margin	$ 50,000

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Answer 2

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