Скачать или смотреть How To Calculate (Basic) Profit Or Loss In Sales In Business Explained

In this video we discuss how to calculate basic profit or loss in sales of an item. We go through the formulas for profit or loss and cover how they relate to the breakeven point

Transcript/notes
Here is a chart, and on the top are sections for cost, operating expenses and net profit. On the bottom is the selling price, which ideally will cover the cost, operating expenses and net profit.

The breakeven point is here, where the selling price covers the cost and operating expenses. Any selling price greater than this will result in a profit, and anything less than this will be a loss. Any loss that is less than operating expenses is an operating loss, and any loss that is less than the cost will be considered an absolute loss. And here are the formulas for each of these on the screen.

Now we are going to go through 2 examples, 1 resulting in a loss and 1 resulting in a profit.

Let’s say that a retailer sells a tablet for $360. It is marked down 30%, the cost of the tablet is $260, and operating expenses are 20% of cost. What is the operating loss and what is the absolute loss?

To answer these questions, we need to know the markdown amount, the reduced price or reduced selling price and the operating expenses amount.

Starting with the markdown amount. The formula to calculate the markdown amount from a percent is, markdown amount equals, the original price times the percent of markdown. So, we have $360 times 30%, or .3, which equals $108.

For the reduced price, we use the formula for markdown, which is reduced price equals, the original price minus the markdown amount. So, we have $360 minus $108, which equals $252.

Now for the operating expenses amount. Since the operating expenses are 20% of cost, to find the dollar amount of operating expenses, we multiply the cost amount times the percent of cost, which is $260 times 20%, or .2. And this calculates to $52.

Let’s look at this visually, as I have put this in a chart. The breakeven point will be here, $312, the cost plus the operating expenses. We have a reduced selling price of $252, which is less than the breakeven point, and even less than the cost of the tablet.

The formula to calculate the operating loss is operating loss equals, the breakeven point minus the reduced selling price. So, we have $312 minus $252, which equals $60 as the operating loss.

And the formula to calculate the absolute loss is the cost minus the reduced selling price. So, we have $260 minus $252, which equals $8 as the absolute loss. And that answers the questions.

Now let’s look at profit. We are going to use the same numbers as the last example, but this time the markdown is 10% instead of 30%. Everything will remain the same except the reduced price will be $324. Here is a chart showing this visually. So, to calculate the profit, it is the reduced price minus the breakeven point, $324 minus $312. Which equals $12 as the net profit for the tablet at a 10% markdown.

Chapters/Timestamps
0:00 Intro chart
0:11 Breakeven point, profit and loss explained
0:22 Operating loss and absolute loss explained
0:39 Example of loss in sales
1:02 How to calculate markdown amount
1:18 How to calculate reduced price amount
1:50 Visual explanation
2:37 Example of profit