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Steps to find Profit

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Steps to find the accurate profit of a particular product:

Step 1: Generate product level Sales and Profit report

Step 2: Generate Cost Report of all products

Step 3: Compare sale value each product with corresponding cost to arrive at profit for each product

Using VLOOKUP Formula in MS Excel can help in calculating accurate profit of the each product easily.

Using the product profitability report above, one may observe that Five Star chocolate is loss making since the cost per unit is Rs.7 while the selling price after discount is Rs.5 only. The management can take a decision of reducing the discount to Rs.3 or lower to ensure zero margin or some profit margin.

1.How can a company improve the profitability of a product with a lower gross profit margin?
  • Increase the product's selling price
  • Reduce the volume of sales
  • Lower direct costs
  • Increase indirect costs
2.Product profit analysis is helpful in making decisions regarding:
  • Employee salaries
  • Marketing strategies
  • Supplier selection
  • Product discontinuation or improvement

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