The profit margin for that product is -5%.
The profitability of your company is determined by your profit margin. It evaluates how much of each dollar in sales or services your company retains from its profits and is stated as a percentage. When the net income of the business is divided by the net sales or revenue, the result is the profit margin. Ken Wentworth of Wentworth Financial Partners said, "Profit margin is important because simply put, it shows how much of every revenue dollar is flowing to the bottom line." "It can instantly identify pricing issues.
When your manufacturing expenses exceed your entire revenue for a certain time period, you have a negative profit margin. This indicates that your business model is not sustainable because you are losing money rather than making it.
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