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.The firm pays zero taxes.These are the only costs associated with making DryFruit Gum.During the year,the firm sells 30,000 kilograms of chewing gum at $45 per kilogram.The net profit margin for DryFruit is closest to:

Question

Quizplus · Accepted Answer

Net income = 30*(45-25)-100 = $500,000.Profit margin = 500/(30*45)= 37.04%

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