Profit Planning and Control
Profit Planning and Control
Profit Planning and Control
Cash
Accounts
Receivable
Types of Expenses
Fixed
Variable
Expenses
Materials Office & Supplies
Salaries Sales Promotion
Utilities Taxes & Licenses
Depreciation Maintenance
Rent Delivery
Building Services Miscellaneous
Insurance
Interest
Profit (Income)
“…the difference between
revenue earned and expenses
incurred.”
Initial Steps
In Profit Planning
1) Establish Goal
2) Determine Expected Sales
Volume
4) Estimate Expenses
5) Determine Estimated Profit
6) Compare Estimate With Goal
Action Steps
In Profit Planning
1) List alternatives
to improve profits
2) Determine how
expenses & profits
vary with volume
3) Analyze alternatives vis-à-vis profit
4) Select an alternative & implement
Action Steps In Profit Plan
1. How Do Expenses Vary With Volume
Sales Expenses
a. $364,000 $364,000
b. $530,000 $490,000
c. $700,000 $618,700
Volume Profit
a. $364,000 $ -0-
b. $530,000 $ 40,000
c. $700,000 $ 81,300
4. Analyze Alternatives
5. Select/Implement Plan
Planning For Profit
Establish Profit Goal $ 52,000
Determine Sales Volume 530,000
Estimate Expenses 490,000
Determine Profit Estimate 40,000
Compare Profit To Goal -$12,000
List Alternatives
a. Change Sales Volume
b. Decrease Expenses
c. Add Products/Services
d. Subcontract
Breakeven Chart
Control
“…the process of ensuring
that organizational goals are
achieved.”