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making profit

louiselouise Feels At HomeRegistered Posts: 49
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?????

Comments

  • crispycrispy Trusted Regular SouthamptonRegistered Posts: 456
    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:
  • louiselouise Feels At Home Registered Posts: 49
    thanks for that!!!

    helpfull :)
  • louiselouise Feels At Home Registered Posts: 49
    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???
  • crispycrispy Trusted Regular SouthamptonRegistered Posts: 456
    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
  • louiselouise Feels At Home Registered Posts: 49
    yes thanks! ill print it out and add to my notes

    :thumbup1:
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