admd82
Jul 14, 2012, 09:12 AM
A company has fixed costs (FC) of $3 millions. Cost of good sold consists of fixed manufacturing overhead (FMO) of $1 million and variable cost of good sold (VCGS) of 50%. I need to find the breakeven and the profits or loss if sales are $10 millions.
Where does the VCGS applies? Is it 50% of FMO, or FMO+FC?
I tend to believe it's 50% of FMO=500,000, but I am not sure since I am not a native English speaker.
Breakeven=>Revenue=Costs. Total costs: 3+1+0.5=$4.5 millions.
Profits, when sales $10 millions: Sales-Total costs= 10-4.5=$5.5 millions.
Correct me if I'm wrong.
Thank You!
Where does the VCGS applies? Is it 50% of FMO, or FMO+FC?
I tend to believe it's 50% of FMO=500,000, but I am not sure since I am not a native English speaker.
Breakeven=>Revenue=Costs. Total costs: 3+1+0.5=$4.5 millions.
Profits, when sales $10 millions: Sales-Total costs= 10-4.5=$5.5 millions.
Correct me if I'm wrong.
Thank You!