remember these…. net profit gross profit cost of sales sales overheads (animation)
TRANSCRIPT
Remember these….
Net profit
Gross Profit
Cost of sales
Sales
Overheads (animation)
ProfitWhat does it mean? One sentence
2 things that affect how much you make?
What where the items on the board at the start?
• Overheads
• Sales
• Cost of Sales
• Net Profit
• Gross Profit
• But what do they all mean?
The structure of a profit and loss account 1
Top part is concerned with gross profit, e.g.
£
Sales 300,000
Cost of sales 100,000
Gross profit 200,000
Note: cost of sales is the same as ‘cost of purchases’. It is deducted from sales.
The structure of a profit and loss accounts 2
Second part is concerned with net profit, i.e. gross profit minus expenses.
£Gross profit 200,000Expenses
Salaries 55,000Rent 10,000Other 5,000
Total expenses 70,000Net profit 130,000
Your turn!Sales
Cost of sales
Gross profit
Expenses
Salaries
Rent
Electricity
Other
Total expenses
Net profit
£
68,000
12,000
5,000
5,000
£
320,000
160,000
??
??
??
90,000
Profit and Loss Costs
Revenue (Money Made)• Smoothies = 50p eachCosts per smoothie• Yoghurt = 12p• Fruit = 10p• Orange = 5p• Electricity = 3p• Telephone = 2p• Labour = 10p
Calculate a profit and loss account – if I make 50
REMEMBER
Difference between cost of sale and overhead/expenses!
Using the following financial information for Arfur Daley Plc.
construct a P&L account using the appropriate format.
Profit and Loss Forecasting
Arfur Daley’s Car Showroom
Arfur Daley setup a business selling second hand cars. He forecasts his figures for next year as follows:
£Sales 500,000Cost of painting/servicing cars 20,000Cost of buying cars 350,000Rent of Showroom 9,000Rates 4,800Assistants wages 5,000Other showroom expenses 7,000Tax 34,000Dividends 25,000