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ROLLNO: 39.
PROFITABILITY OF PRODUCT:
Production of which product is more profitable for the company as per the given data.
Product A Product B
(Cost per unit Rs.)
(Cost per unit Rs.)
i. Direct Materials 40 45
Factory 3
4
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ix. Profit 20
25
After analyzing we can see product B provides more profit than product A.
Marketing Profitability =
Relative profitability:
It can be done only between products that are similar in nature or of same
behavior.
* Book value per share = Total common equity divided by the number of
common shares outstanding.
* Gross profit percentage = Total cost of sales for a given period divided
by total sales for that period. * Net profit percentage = Net income for a
given period divided by total sales for that period.
For example, assume that a company sells two products. Product A has a
per unit sales price of 120, and Product B has a per unit sales price of 100.
A salesperson, earning a commission calculated as 5% of total sales, would
prefer to sell product A. However, the company is better off when Product B
is sold, because it has a higher contribution impact (30 vs. 20).
Product A 120 60 40
20
Product B 100 40 30
30