Profitability Analysis

Specify the purpose

1
To find the
profitability of Charlie
Lyons
2
Identify functional
cost centre
Order getting cost Order filling cost
Direct selling Packaging
Advertising Transportation
Travel expense Warehousing
Commissions Order processing
Rent
3 Convert natural expenses into functional accounts
Natural Accounts Selling Direct Costs
Selling Indirect
Costs
Salaries 177,000 106500 47500
Commissions 37431 37431
Advertising 131915
Packaging 43642
Warehousing &
Transportation 76374
Travel expenses 59340 57340 2000
Order Processing 770
Rent 83000 18500
Total Expenses 609,472 201,271 68,000
4 Full Cost Approach 3151
Functional Accounts
Receivers
Sales 2,638,340 787,750
Cost of Goods Sold ($)
2,014,485 668,012
Gross margin ($) 623,855 119,738
Expenses: -
Salaries 177,000 59,000
Commissions 37,431 7,184
Advertising 131,915 39,388
Packaging 43,642 6,302
Ware Housing &
Transportation 76,374 11,029
Travel Expenses 59,340 19,780
Order Processing 770 257
Rent 83,000 27,667
Total
Expenses 609,472 170,606
Net Profit (before taxes)
($) 14,383
Net profit
50,868 -
5 Marketing profitability of indvidual market segments
Advertising Order Processing
Warehousing
&
Transportatio
n Packaging
11000
12000
131915
43642
76374
770
4500 40000 20000
131,915 17,270 116,374 74,642
2789
American TV
12079 6591 Receivers Turntables
Turntables Speakers 422 1513
1,026,715 823,875 2,638,340 Sales 105500 128605
773,056 573,417 2,014,485
Cost of Goods Sold
($) 89,464 96832
253,659 250,458 623,855 Gross margin ($) 16,036 31,773
- - - Expenses:
59,000 59,000 177,000 Salaries 5,537 5,537
15,220 15,027 37,431 Commissions 962 1,906
51,336 41,194 131,917 Advertising 5,275 6,430
24,158 13,182 43,642 Packaging 844 3,026
42,277 23,069 76,374
Ware Housing &
Transportation 1,477 5,296
19,780 19,780 59,340 Travel Expenses 1,891 1,891
257 257 770 Order Processing 37 37
27,667 27,667 83,000 Rent 2,306 2,306
239,693 199,175 Total Expenses 18,328 26,428
Net Profit (before
taxes) ($) 2,292 - 5,345
13,966 51,283
American Tv Appliance Mart
No. of sales calls 65 55
Av time 55 45
Total time 3575 2475
1964
Appliance mart
Speakers Receivers Turntables Speakers Receivers
854 337 1058 569 85
106750 84250 89930 71125 21250
74298 71,444 67712 49503 18,020
32,452 12,806 22,218 21,622 3,230
5,537 3,833 3,833 3,833 3,485
1,947 768 1,333 1,297 962
5,338 4,213 4,497 3,556 1,063
1,708 674 2,116 1,138 170
2,989 1,180 3,703 1,992 298
1,891 1,600 1,600 1,600 1,454
37 14 14 14 18
2,306 2,306 2,306 2,306 2,306
21,751 14,587 19,401 15,735 9,755
10,701 1,781 - 2,817 5,887 6,525 -
13,754 6,923
Audio Emporium
50
45
2250
8300
1014
Audio Emporium
Turntables Speakers
455 474
38675 59250
29120 41238
9,555 18,012
3,485 3,485
1,906 1,947
1,934 2,963
910 948
1,593 1,659
1,454 1,454
18 18
2,306 2,306
13,605 14,779
4,050 - 3,233 13,335
7,342 -