Net Profit pp SECTION

SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 2 of Key Words to Know operating expenses (p. 522) The costs of running a business, such as salaries, rent, utilities, and taxes, also called overhead.

SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 3 of How do I calculate overhead expenses? Overhead = Selling Price × Overhead Percent How do I calculate the net profit? Net Profit = Markup – Overhead Formulas

SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 4 of Sport Shop purchases water tubes for $44.98 each. It sells the tubes for $89.99 each. The owner estimates the overhead expenses to be 40 percent of the selling price of the merchandise. What is the net profit on each tube? Example 1

SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 5 of Find the markup. Selling Price – Cost $89.99 – $44.98 = $45.01 Example 1 Answer: Step 1

SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 6 of Find the overhead. Selling Price × Overhead Percent $89.99 × 40% = $ or $36.00 Example 1 Answer: Step 2

SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 7 of Find the net profit. Markup – Overhead $45.01 – $36.00 = $9.01 Example 1 Answer: Step 3

SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 8 of Anamarie’s Shoppe buys chemises at a cost of $ Anamarie’s sell the chemises at a selling price of $ Its management estimates the overhead expenses to be 34 percent of the selling price of the merchandise. What is the net profit on each chemise sold? Example 2

SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 9 of Find the markup. Selling Price – Cost $24.49 – $12.78 = $11.71 Example 2 Answer: Step 1

SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 10 of Find the overhead. Selling Price × Overhead Percent $24.49 × 34% = $ or $8.33 Example 2 Answer: Step 2

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