Business Gross and Net Profit

Gross and Net service Gross do good A corporations revenue, minus the business cost of goods For example If I exchange 5000 cheese sandwiches for ? 1 each my total revenue would be 50 x ? 1 = ? 5000 It be 25p per sandwich to purchase bread, stillter and cheese. My sodding(a) profit = Revenue Costs of sales (25p x 5000= ? 1250. 00) = ? 3750. 00 Net profit The business coarse profit minus expenses For example My gross profit from my sandwiches is ? 3750. 00 to calculate my Net profit I need to minus the recess of my expenses ? 385 on rent ? 80 on advertising ? 950 on staff salaries My total expenses are ? 1,415 My net profit= Gross profit (? ,750) Expenses (1,415) = ? 2,335 The contrariety between gross and net profit The difference between gross and net profit is that gross profit is merely a stepping pit to work start the net profit. Say at the end of a calendar month a business has ? 5000 in the bank, we need to work out the gross profit to know exactly how much we maintain to bear to the manufacturer and to cover the costs of materials. The same goes for net profit. Say subsequently the business had worked out the gross profit and we had ? 4250 left in the bank, we heretofore wouldnt know exactly how much money we had made that month until we had worked out the net profit. Cost of salesCost of sales is the cost of the materials used to attain a product. This let ins any costs included in making the product, this includes exile costs Cost of containers Overhead costs linked directly to the manufacture, like rent for the manufacturing facilities Costs vary dependant on the industry. For example a retail business buys products to resell them at a higher price, but a manufacturer either buys raw materials and turn them into finished products, or buy parts and just assemble them, ready for sale. Expenses Expenses are altogether the costs that a business or organization has to pay out, this includes located costs Variable cost Taxes All other operating costs How to maximise profits There are several different ways a business or organization can maximise profits, these include Lowering the costs of sales by using cheaper materials Lowering the costs of sales by minimizing manufacturing costs Nike Sports wear and Primark got a lot of great(p) press by moving their manufacturing factories abroad. They did this to emiter their manufacturing costs as the workers have no minimum wage, or even minimum age so they can have their goods made at a very low price. Increasing the price of sales, (making your product more expensive)