Profitability allows you to determine which product was the most profitable, that is, the most profitable for production. Also, it is necessary to take into account that the cost price based on equilibrium prices must correspond to the production costs. Under the conditions of an administrative-command economy, where prices are determined by a volitional (subjective) way, like the target costs of an enterprise, the cost does not reflect the state of the economy, and as a result, it was impossible to calculate the actual profitability of products.
Instructions
Step 1
The profitability of products can be in three ways: profitability of marketable products, products sold and individual products. The profitability of marketable products can be determined by the indicator of costs per monetary unit of marketable products or its reciprocal.
Formula:
(Т-С) / Т * 100, where Т is the commercial product of the enterprise at wholesale prices; C is the total cost of marketable products.
There is a classic formula for determining the profitability of a commercial product:
(T-C) / C * 100.
The profitability of products sold is the ratio of the profit from the sale of manufactured products to its cost in full.
Product profitability is the ratio of the profit per unit of the product produced to the cost of the product. The profit per item can be found from the difference between the wholesale price of the item and the cost price.
Step 2
The profitability of products (it is also called the rate of profit) is the ratio of profit (its total amount) to product sales (the relative amount of profit, which accounts for only 1 ruble of current costs) and production costs.
Step 3
With the help of the profitability of products, the very efficiency of production of specific types of products is assessed, while the profitability of production, or the overall balance sheet profitability, as a whole, serves as an indicator of the efficiency of the company (industry).
Step 4
The profitability of products (services or works) can be determined by the organization as a whole or by individual types of products. With the help of the profitability of products, it is possible to determine whether it is possible for certain types to reduce the cost price. You can also calculate the planned profitability if the company wants to implement a new product.
Step 5
In order to find the profitability of a product as an indicator of the effectiveness of all costs for production or marketing, you should use the following formula:
Profit from the sale of products: for the total cost of production * 100% = Profitability.
