Explanation
Profit analysis examines how changes in price, cost and quantity affect business profit.
Basic Formula
Revenue = Selling Price × Quantity
Variable Cost = Variable Cost per Unit × Quantity
Profit = Revenue − Variable Cost − Fixed Cost
Example
|
Item |
Value |
|
Selling Price |
₹1,000 |
|
Quantity |
500 |
|
Variable Cost |
₹600 |
|
Fixed Cost |
₹1,00,000 |
Revenue:
=1000*500
₹5,00,000
Variable Cost:
=600*500
₹3,00,000
Profit:
=500000-300000-100000
₹1,00,000
Practice
Create a profit analysis model where users can change price, cost and quantity.