Calculating Profit

to calculate profit, producers subtract their total production cost from their This is a topic that many people are looking for. is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, would like to introduce to you Calculating Profit. Following along are instructions in the video below:

” s have a sesh on profit equals revenue minus costs such a big formula for for business. But let s go through all the components. So you fully have it down because it s gonna come up one more the other in your exams. Probably as a math question let s go so profit equals revenue minus costs first thing to note.

When you see as formula you should be thinking not costs. But total costs because that s really what it is it s total costs and total costs. Equals fixed costs. Plus variable costs.

Remember fixed costs. Do not change. Without them. Do not change.

Her outfit. Think about your rent whether you make one thing or you make a billion things your rent stays the same so rent and salaries are an example of fixed costs variable costs variable costs wages and raw materials are examples of variable cost because they vary with output..

So the amount of things you make the costs. The variable costs will go up key thing fixed costs. Plus variable costs. Equals total costs.

And when you see costs here. You re thinking total costs. Other things so more complicated form is a variable cost just this bit has a formula and that is variable cost per unit per unit. Just means per.

One thing. So the variable cost per making one thing times by how many units. How many things you make that equals your variable costs. So if your variable cost per unit your variable cost per.

One thing was a quid and you made 600 things one times 600 is 600. So one times 600 would mean your variable costs is 600 other bullets..

So total cost another way you could look at it is average unit costs. So the average cost for making one thing tires by how many things you make also equals your total costs the exams will come from one of those angles to try and confuse you in those five mark maths questions. Let s go to revenue first thing revenue. Another name for revenue is turnover.

Don t be spooked out if you see that word so another name for revenue is turn over the formula for revenue is sales times. Price. Let s keep our simple. So if you sell ten apples as your sales.

Was 10 and you sold each for 50p. An apple. So your price was 50 p. 10 times northmen five equals five quick so your revenue your turnover would be five quick slight problem is that many businesses sell more than one good or service.

Which is why you might have to do this formula several times imagine you start up not just apples. But you also sold mangoes so you saw those ten apples at 50 ph..

But you also sell ten mangoes at one pound each you just need to repeat. This formula multiple times and then add it up to get your answer here s an example. So your apples as from before sales times price so ten times nine point five five pounds for your apples. Which we worked out now your mangoes you sold ten mangoes each a quick 10 times.

1. Is 10. So you made five pounds revenue from your apples and 10 pounds revenue from your mangoes. So five plus 10 is 15 15 is your total revenue.

Okay and the last thing is profits so profits equals revenue minus costs first b profit is not is not no. It s not the same thing as cashflow. If there s any confusion. There please watch my video on the exact topic do not be confused profit cash flow.

Different okay. It s a profit theories..

So if your revenue. So if this number is bigger than your cost so if your revenues being your costs clearly you made a profit that s a good thing. If your revenue is smaller than your costs. So your cost is bigger.

Then you ve made a lot if your revenue equals your costs. Then you are breaking even breaking. Even is different to break even break even point because break even point is about how many units. How many things you need to sell to get to the point where your revenue equals your costs like your exams.

I hope you smash that numerical question and get all five marks. It s beautiful and remember for that question put the formula down. If you get one just for that and for for working it out ” ..


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