1. Week 8 Operations and Price of Goods Sold
Entrepreneurship
Week 8
Operations and Price of Goods Sold

2. Cost of Goods Sold
It costs money to make and sell a product. Take pizza To make a pizza, you need dough, sauce, and toppings. You may also need napkins when people eat, or a box if people carry the pizza home. Those costs are called “cost of goods sold”

3. Cost of Goods Sold
A table of pizza costs might look like this: The cost you pay to make the pizza is 1.7 OMR – the “cost of goods sold”
Ingredient
Source
Cost
Dough
Acme restaurant supply
.50 OMR
Tomato sauce
.1 OMR
Beef pepperoni
.8 OMR
Box
Muscat paper supply
.3 OMR
Total cost per pizza
1.7 OMR

4. Cost of Goods Sold Ice cream shop example
Costs of one ice cream cup:
Item
Source
Cost
Ice cream (1 scoop)
Muscat Creamery
.4 OMR
Cups, napkin, spoon
Nizwa Restaurant Supply
.1 OMR
Total cost
.5 OMR

5. Cost of Good Sold – Photobook example
Costs of one photobook:
Item
Source
Cost
180 page book
Muscat Instaprint
6 OMR
Total cost

6. Cost of goods and Cash flow estimates

7. Cost of Goods Sold – Cash Flow Ice cream shop example – Assume sales begin in month sold month 2 & 3, 300 sold month 4. Cost is .5 OMR. Customer price is 1 OMR
Item
Month 1
Month 2
Month 3
Month 4
Store rent
200
electricity 20
labor
120
water 10
Cost of Goods sold
100
150
Total costs
350
450
500
Revenue
300
Profit / (loss)
(350)
(250)
(200)

8. Cost of Goods Sold – Cash Flow Ice cream shop example – Assume sales begin in month 2 Cost = .5 OMR, Price = 1 OMR What is cash flow if sales are 500 ice creams in months 2-4?
Item
Month 1
Month 2
Month 3
Month 4
Store rent
200
electricity 20
labor
120
water 10
Cost of Goods sold
Total costs
Revenue
Profit / (loss)

9. McDonalds has these costs for their ice cream- Cost =. 1 OMR, Price =
McDonalds has these costs for their ice cream- Cost = .1 OMR, Price = .2 OMR What is cash flow if sales are 5000 ice creams each month?
Item
Month 1
Month 2
Month 3
Month 4
Store rent
200
electricity 20
labor
120
water 10
Cost of Goods sold
Total costs
Revenue
Profit / (loss)

10. Flower shop Flower Cost =. 05 OMR, Flower price =
Flower shop Flower Cost = .05 OMR, Flower price = .2 OMR What is cash flow if sales are 400 flowers each month?
Item
Month 1
Month 2
Month 3
Month 4
Store rent
250
electricity 20
labor
120
water 10
Cost of Goods sold
Total costs
Revenue
Profit / (loss)

11. Restaurant meal cost = .5 OMR, meal price = 2 OMR What is cash flow if sales are 400 meals each month?
Item
Month 1
Month 2
Month 3
Month 4
restaurant rent
250
electricity 30
labor
300
water 20
Cost of Goods sold
Total costs
Revenue
Profit / (loss)

12. Dress Shop dress cost = 4 OMR, dress price = 7 OMR What is cash flow if sales are 200 dresses each month?
Item
Month 1
Month 2
Month 3
Month 4
Shop rent
250
electricity 50
labor
400
Cost of Goods sold
Total costs
Revenue
Profit / (loss)