Profit & Loss sheet
Can someone please help me get my head around the example Profit & Loss sheet. If Sales/Turnover is at 60,894, how do you get to the gross profits of 29,363. If you took off the cost of goods sold at 31,531 it would give you that gross profit but what happens to the Direct labour costs at 7,364. Excuse the stupid question but i just cant work out what happens to it
Cost of goods sold is calculated differently for merchandising business than for a manufacturer.
With merchandising it is Turnover – overheads = gross profit
With Manufacturing it is Turnover – overheads + direct labour = gross profit
Hope this helps
Thanks for clearing that up.
It’s ok remember direct labour costs is a cost to you and that make’s it a liability making it a loss.