making profit

louise

i don understand, the formula of :
i.e:

how much sale to make x profit.

or how much profit if sales are 66 a month at £400 ea.

how is this done?????

crispy

Hello,

Lets say you needed to calculate the sales required in order to generate a profit of £50 and had the following information,

At Breakeven point Sales = £400, Fixed Costs = £200

To calculate:
£200/£400 = 0.5
Required Profit £50/0.5 = £100
Add sales value at Breakeven Point £400+£100 = £500

Therefore the sales value required to generate the £50 Profit = £500

Hope this is of some use :001_smile:

louise

thanks for that!!!

helpfull

louise

helo!!

i was studying last night and, i came across this formula for making profit::

FC + Pofit
_________ = Y

Contribution per unit


Profit/Y = x

Breakeven + x = outcome needed


is this correct or is the other way it???

crispy

Hi :001_smile:

Both formulas are correct and can be used depending on what information you have been given, the second formula I think is as the calculation I first gave. The first formula the value Y should result in number of units needed to sell in order to generate the required profit. So if using my first figures:

Selling Price £20
less:Variable Cost £(10)
Contribution per unit £10

Fixed Costs + Required Profit (£200 + £50) = £250
Contribution per unit = £10
£250 / £10 = 25units (Value of Y)

25units X Selling Price £20 = £500

Hope this makes sense

louise

yes thanks! ill print it out and add to my notes

:thumbup1: