INTRODUCTION TO PROFIT Part 11

Starter What is the “cost of sales”? What is Profit?

Lesson Objective To be able to define the cost of sales. To be able to define and calculate gross profit from a formula.

Activity 1 £3 + £2 = £5 (£3 x 15) + (£2 x 15) = £45 + £30 = £75

Activity 2 £1 + £2 + £ £ £5 = £15 (£1 x 5) + (£2 x 5) + (£1.50 x 5) + (£5.50 x 5) + (£5 x 5) = £5 + £10 + £ £ £25 = £75 L/O: Calculate cost of sales

Gross Profit Revenue – Cost of Sales = Gross Profit The money made from selling a product (the revenue), AFTER the cost of producing the product (the cost of sales) has been deducted. E.g. It costs me £10 to make a table and I sell it for £16. Therefore, my Gross Profit is £6.

Activity 3 Revenue = £200 Cost of Sales = £100 Gross profit = £200 - £100 = £100 L/O: Calculate Gross Profit

Activity 4 10 x £25 = £250 = revenue 10 x £15 = £150 = cost of sales £250 - £150 = £100 = gross profit 17 x £25 = £425 = revenue 17 x £15 = £255 = cost of sales £425 - £255 = £170 = gross profit L/O: Calculate Gross Profit

Activity 5 L/O: Identify cost of sales

Activity 6 1. (£2 x 2) + £ £ £4 = £9 2. £9 x 15 = £135 = cost of sales 3. Revenue = 15 x £16 = £240 Gross Profit = £240 - £135 = £105 L/O: Calculate Gross Profit

Recap