Profit and loss

1. Profit and loss March 2011. Kindly contributed by Susan Brocklehurst, City College, Norwich. Search for Susan on www.skillsworkshop.org This PPT accompanies a separate PDF workbook . Both resources directly relate, in terms of theory, to the VRQ qualification, the Foundation Diploma and also ABC Level 1 Catering. Curriculum links This PPT, and the accompanying PDF workbook, covers many aspects of Level 1 and Level 2 Functional Mathematics and adult numeracy. Please refer to the download page for this resource on skillsworkshop.org for detailed curriculum links and related resources.

2. Profit and loss

3. Gross profit • Gross profit = sales – cost of sales • Discuss: what does this formula mean? • Complete the examples in your workbook. • Swap with a partner and check each other’s work

4. Net profit • Net profit = sales – all costs • In pairs, write down a list of all other costs that you can think of in a hotel/restaurant operation • Feedback to whole class

5. Costs Costs can be divided into: • Cost of sales • Overheads • Labour/wages

6. Overheads • Discuss in pairs which costs fall under the heading of overheads – think about bills that come through the letter box each month. • Feedback to class

7. Wages/labour • Discuss in pairs which costs fall under the heading of wages/labour – think about all the costs associated with employing someone. • Feedback to class

8. Net profit Net profit = sales – all costs • Complete the examples in your workbook. • Swap with a partner and check each other’s work

9. % gross profit • All organisations will work to an agreed % gross profit • For example, Dunston Hall works to 74%, the George Hotel to 72%. • % gross profit = gross profit/selling price x 100%

10. Using % gross profit to calculate how much to charge for a dish If a dish costs £3.20 to produce and % gross profit is 70% • How much should you charge for this dish? • How did you work this out? • Can you show this in a formula?