Learn about how to use past product data to put together a clear picture of the profitability by product, and how it can be used for decision-making.
- We're going to discuss now how to get started…with determining the profitability of your product.…Let's start with figuring out what data you should use…to do that.…When you think about it, there are many moving parts…in product profitability.…First of all, you need to determine what costs…to allocate to each product and then decide…which of these to measure.…For example, you should list all the direct and indirect…costs of your company and decide on the methodology…to tie them to each of your products.…
But for those costs, you also have to determine…which pieces of data you're actually going to use.…For example, consider our lemonade stand.…Let's imagine you've been running the business for 10 years.…We can use that information from these past years…to determine the cost of each lemonade.…Would you use the information from all 10 years…or just a portion of it?…If so, which portion should you use?…Answering all those questions is called…defining a baseline.…
In other words, you're going to put down all the rules…
- 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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