Profits l Entrepreneurs use profits to l Pay

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Profits l Entrepreneurs use profits to – – – l Pay themselves Expand their

Profits l Entrepreneurs use profits to – – – l Pay themselves Expand their business Start other businesses Gross profit is the amount you make after expenses are paid for an item or service

Economics of One Unit of Sale l l l Unit of Sale can be:

Economics of One Unit of Sale l l l Unit of Sale can be: ❖ One item, such as a shirt ❖ One hour of service time ❖ One customer ❖ A combination of different items expressed as the average sale per customer (minus the average cost of goods sold per customer)

Examples of costs in making a product: l l l l Materials Labor (the

Examples of costs in making a product: l l l l Materials Labor (the people involved in making it) Transportation Storage Packaging Design And so much more!!!!

How to calculate gross profit l l l Selling price per unit – cost

How to calculate gross profit l l l Selling price per unit – cost of good per unit= Gross profit per unit --SALES – COST = PROFIT For example (page 20) – – – Sneaker You sell a sneaker for $15, BUT it costs 12 dollars to make it. How much do you make in profit? $15 - $12= $3

How to calculate gross profit, cont. l l l After finding out the gross

How to calculate gross profit, cont. l l l After finding out the gross profit of one unit of sale, to find out the profit of multiple sales, you just MULTIPLY the gross profit of one by the number of items sold. For example: If Little Caesars can make a pizza for $3, then sells one for $5, they make a profit of $2. If they then came here on a Friday and sold 10, they would make $20. $2 X 10 = $20