To produce chewing gum, DryFruit Gum Company pays $100,000 per year for rent on a long-term lease and $25 per kilogram for sorbitol and other ingredients.These are the only costs associated with making DryFruit Gum.During the year, the firm sold 30,000 kilograms of chewing gum at $45 per kilogram.Ignoring income taxes, the profit margin for DryFruit is closest to:

Question

Quizplus · Accepted Answer

The profit margin is calculated as (Net Income / Revenue) * 100. Here, Revenue = 30,000 kg * $45/kg = $1,350,000. Costs include rent ($100,000) and ingredients ($25/kg * 30,000 kg = $750,000), totaling $850,000. Thus, Net Income = Revenue - Costs = $1,350,000 - $850,000 = $500,000. Profit Margin = ($500,000 / $1,350,000) * 100 = 37.04%.

To Produce Chewing Gum, DryFruit Gum Company Pays $100,000 Per