Methods of increasing enterprise profits using examples
Posted: Thu Jan 23, 2025 4:09 am
Increase in sales volume
The company, which produces chairs, plans to increase sales from 4,640 units to 5,000 units per year. It is assumed that there is a necessary level of demand for the product in the market, and that increasing production volumes will not require additional hiring or equipment.
The cost of one unit of production is 24 thousand rubles. Fixed costs are 16,850,180.04 rubles per year. Variable costs per unit of production are 15,655.94 rubles. Let's calculate the chile mobile phone numbers database planned profit by increasing the sales volume reserve:
Revenue for the reporting period = 4640 * 24,000 = 111,360,000 rubles.
Revenue for the planned period = 5000 * 24,000 = 120,000,000 rubles.
Fixed costs = 16,850,180.04 rubles.
Variable expenses for the reporting period = 4640 * 15,655.94 = 72,643,561.6 rubles.
Variable expenses of the planning period = 5,000.00 x 15,655.94 = 78,279,700 rubles.
Profit for the reporting period = 111,360,000 - 16,850,180.04 - 72,643,561.6 = 21,866,258.36 rubles.
Profit for the planned period = 120,000,000 – 16,850,180.04 – 78,279,700 = 24,870,119.96 rubles.
Thus, all other things being equal, an increase in sales volume by 7.8% will lead to an increase in the organization’s profit by 14% or 3,003,861.60 rubles.
Increase in cost per unit of production
Increase in cost per unit of production
The company plans to increase the price per unit of production to 25 thousand rubles. Other indicators (demand, sales volume, conditionally fixed and conditionally variable costs) do not change. Let's calculate the new profit value:
Revenue in the planning period = 4640 * 25,000 = 116,000,000 rubles.
Profit in the planning period = 116,000,000 - 72,643,561.6 - 16,850,180.04 = 26,506,258.36 rubles.
As a result, due to the increase in the reserve for price growth, profits can increase by 21% or 4,640,000 rubles.
Both of the above methods of increasing enterprise profits are hypothetical in nature, since they are based on the assumption that the level of demand for products is at the required level and consumers will be willing to buy goods at a higher price or in larger quantities.
The company, which produces chairs, plans to increase sales from 4,640 units to 5,000 units per year. It is assumed that there is a necessary level of demand for the product in the market, and that increasing production volumes will not require additional hiring or equipment.
The cost of one unit of production is 24 thousand rubles. Fixed costs are 16,850,180.04 rubles per year. Variable costs per unit of production are 15,655.94 rubles. Let's calculate the chile mobile phone numbers database planned profit by increasing the sales volume reserve:
Revenue for the reporting period = 4640 * 24,000 = 111,360,000 rubles.
Revenue for the planned period = 5000 * 24,000 = 120,000,000 rubles.
Fixed costs = 16,850,180.04 rubles.
Variable expenses for the reporting period = 4640 * 15,655.94 = 72,643,561.6 rubles.
Variable expenses of the planning period = 5,000.00 x 15,655.94 = 78,279,700 rubles.
Profit for the reporting period = 111,360,000 - 16,850,180.04 - 72,643,561.6 = 21,866,258.36 rubles.
Profit for the planned period = 120,000,000 – 16,850,180.04 – 78,279,700 = 24,870,119.96 rubles.
Thus, all other things being equal, an increase in sales volume by 7.8% will lead to an increase in the organization’s profit by 14% or 3,003,861.60 rubles.
Increase in cost per unit of production
Increase in cost per unit of production
The company plans to increase the price per unit of production to 25 thousand rubles. Other indicators (demand, sales volume, conditionally fixed and conditionally variable costs) do not change. Let's calculate the new profit value:
Revenue in the planning period = 4640 * 25,000 = 116,000,000 rubles.
Profit in the planning period = 116,000,000 - 72,643,561.6 - 16,850,180.04 = 26,506,258.36 rubles.
As a result, due to the increase in the reserve for price growth, profits can increase by 21% or 4,640,000 rubles.
Both of the above methods of increasing enterprise profits are hypothetical in nature, since they are based on the assumption that the level of demand for products is at the required level and consumers will be willing to buy goods at a higher price or in larger quantities.