Unit 3

• Sales Revenue

  Price per unit x Number of units
• Profit


  Revenue - Total Costs
• Gross Profit


  Revenue - Cost of Goods Sold
• Total Costs 


  Fixed costs+ Variable costs
• Net Profit

  Sales Rev - Costs of Sales - Expenses/Fixed Costs
• Unit Cost


  Total Unit Cost/Output
• Contribution per Unit 


  Price Per unit - Variable costs per unit
• Variable (direct) Costs


  Costs that vary with the level of output
• Breakeven 


  Fixed Costs/ Contribution per unit
• Fixed costs


  Also known as Overheads
• Calculating profit


  1. Sales Revenue

  2. Cost of Sales

  3. Expenses and/or Fixed Costs
• Total Unit Cost/Output


  Cost per unit produced
• Contribution Per Unit


  Price per Unit - Variable Cost per Unit
• Break-Even Sales


  The level of sales where total revenue equals total costs
• Actual Sales in Units

  Exceeds Break-Even Sales in Units
• Gross profit


  Gross profit = Sales Revenue - Cost of Sales
• Historic Value


  The original cost of an asset
• Residual Value


  The estimated value of an asset at the end of its useful life
• Margin of Safety 


  Actual Sales - Breakeven sales in units
• Profit/Loss


  Gross profit - expenses + other income
• Depreciation


  Historical Value - Residual Value/Expected Life
• Net Current Assets 


  Current Assets - Current Liabilities
• Gross Profit Margin Ratio

  Gp/rev x 100
• Net profit margin ratio


  np/rev x 100
• Markup


  Gp/ cost of sales x 100