The Frozen North Construction Company would like to forecast its minimum volume of work (turnover) in order to “break even” (i.e., cover its corporate overheads) for the coming year. The company’s previous year’s corporate overheads were $900,000. The company anticipates 22% inflation and 6% growth in the firm for the coming year. It also expects to achieve a gross margin of 13% on its projects, based on old experience. The company defines gross margin as a percentage of revenue (i.e., selling price). Determine the minimum volume of work, which will allow the Frozen North Company to break even at the end of the coming year.
The Frozen North Construction Company would like to
Determine the minimum volume of work, which will allow the Frozen North Company to break even at the end of the coming year.
In this problem, we are required to determine the minimum volume of work, which will allow the Frozen North Company to break even at the end of the coming year.
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