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    admd82's Avatar
    admd82 Posts: 2, Reputation: 1
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    #1

    Jul 14, 2012, 09:12 AM
    variable cost of goods sold
    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!
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #2

    Jul 15, 2012, 03:28 PM
    Quote Originally Posted by admd82 View Post
    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!
    A little study of the subject will help you
    http://en.wikipedia.org/wiki/Break-even_(economics)
    admd82's Avatar
    admd82 Posts: 2, Reputation: 1
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    #3

    Jul 16, 2012, 06:32 AM
    Indeed is a little study...
    You shouldn't have spent your valuable time for this answer.
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #4

    Jul 17, 2012, 12:03 AM
    Quote Originally Posted by admd82 View Post
    Indeed is a little study...
    You shouldn't have spent your valuable time for this answer.
    Happy to help
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