A Scandinavian wind turbine manufacturer is attempting to understand the profit impact of a price change on turbines. Currently, a 1.5- megawatt wind turbine has a total price of $1.7 million for an electric generator but faces only 1.3 million in marginal cost to deliver. What is the initial gross margin?

Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter10: Cost Analysis For Management Decision Making
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What is the initial gross margin ?

A Scandinavian wind turbine manufacturer is
attempting to understand the profit impact of a
price change on turbines. Currently, a 1.5-
megawatt wind turbine has a total price of $1.7
million for an electric generator but faces only 1.3
million in marginal cost to deliver.
What is the initial gross margin?
Transcribed Image Text:A Scandinavian wind turbine manufacturer is attempting to understand the profit impact of a price change on turbines. Currently, a 1.5- megawatt wind turbine has a total price of $1.7 million for an electric generator but faces only 1.3 million in marginal cost to deliver. What is the initial gross margin?
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