Unit 3 financial forecasting for business P3 gross and net profit
Learning intentions/objectives To understand what is profit? To understand what is meant by the term Gross profit To understand what is meant by the term Cost of sales To understand what is meant by the term Net profit To understand what is meant by the term Operating costs
Gross profit A trading, profit and loss account shows the business's financial performance over a given time period, eg one year. Sales revenue£80,000 Less costs of sales£50,000 Gross profit£30,000 Less other expenses£20,000 Net profit£10,000 Business made a gross profit of £30,000 before expenses like overheads. The profit and loss account shows a net profit of £10,000 has been made.
Cost of sales The cost of production for items. Only counted for unsold goods. For example you make 4 tables Cost £50.00 each in Materials = £ Sell them 2 of them £ each £ back Still got £ C.O.S for other two.
expenses Wages Tax Utilities Rent Advertising Etc All adds up.
Class Task In pairs Research your costs for the following items: Screen printed T- shirts, Burger, Chips and Drink meal, Wooden garden bike sheds. Work out your costs for 1000 units. Your selling price is + 25% of cost price what is your Gross Profit? What are you costs of sales if you have sold 50, 120 and 400 units? Your expenses = £ what is your net profit?