Use the assumptions defined in the previous video to calculate your future product profitability per unit.
- We've calculated the baseline by product.…In the same way, we can calculate our product plan for the…period to come, which, in our example, is the next year.…The idea here is to take the planning assumptions…for revenue, the number of units we plan to sell,…the pricing we have defined and calculate…how much revenue we'll be getting from each product.…And similarly for costs, use our cost goals…to add up what it will cost us in the next year…to produce and sell them.…
Once we have that, we have our plan for the year to come.…We can even divide it by the number of units…to have the revenue and profits brought by each unit.…So for example, we could end up with one million dollars…of revenue from product A and seven hundred thousand dollars…in costs for one hundred thousand units sold.…By dividing our one million dollars of revenue…by one hundred thousand units sold,…we would then know that each unit sells for $10.…
By dividing the seven hundred thousand dollars in costs…by one hundred thousand units sold,…we get the cost per unit as $7.…
- Identify the purpose of cost-accounting.
- Define product profitability.
- Determine your baseline.
- Gather revenue and cost information for your analysis.
- Connect targets with profitability.
- Build your target baseline.
- Analyze pricing.
- Calculate probable product profitability.
Skill Level Intermediate
Excel 2016: Financial Functions in Depthwith Curt Frye2h 38m Intermediate
1. Understand Company Costs Related to Products
2. Determine Your Baseline
3. Plan for the Future
Analyzing your pricing3m 1s
Next steps1m 21s
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