Simple % problem

Garth Vader

New member
Joined
Aug 5, 2020
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11
This will seem super easy to people with good maths brains but I am failing to make sense of it.

I am simply trying to figure out sales profit shown as percentage.
An example from the image attached:
Manganese Alloy costs $35200 to produce and sells for $269100, resulting in a profit of $233900
I have tried 2 formulas to try determine what percent the profit is:
|| 233900 / 269100 x 100 = 86.9 but does 86.9 represent the profit?
|| 269100 / 35200 x 100 = 764.5

My great confusion comes in when I try, as a hypothetical test, to sell for the same cost as production ($35200 sold for $35200). This is obviously a profit of zero but comes out as 100%, I know 35200 is 100% of 35200 but Im trying to derive the sales profit and not the value of one figure against another.
As you can see Im getting myself twisted in a knot.

Thank you for your help.
 

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JeffM

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Sep 14, 2012
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7,417
Let P = profit per unit sold, C = cost per unit sold, and S = sales price per unit sold.

Can you relate those three variables in a single equation?

Based on that formula, how would you express profit as a percentage of cost.

If you can do those two steps, I suspect that you will soon see what is wrong with your formula.
 

The Highlander

Junior Member
Joined
Feb 18, 2022
Messages
245
This will seem super easy to people with good maths brains but I am failing to make sense of it.

I am simply trying to figure out sales profit shown as percentage.
An example from the image attached:
Manganese Alloy costs $35200 to produce and sells for $269100, resulting in a profit of $233900
I have tried 2 formulas to try determine what percent the profit is:
|| 233900 / 269100 x 100 = 86.9 but does 86.9 represent the profit?
|| 269100 / 35200 x 100 = 764.5

My great confusion comes in when I try, as a hypothetical test, to sell for the same cost as production ($35200 sold for $35200). This is obviously a profit of zero but comes out as 100%, I know 35200 is 100% of 35200 but Im trying to derive the sales profit and not the value of one figure against another.
As you can see Im getting myself twisted in a knot.

Thank you for your help.
I’m afraid neither of your approaches is correct.

To calculate
Gross Profit you take the difference between what you sell something for (TOTAL SALES) and what it cost to produce (COGS) as a percentage of what it cost to produce (ie as a %-age of COGS). See diagram (below).

So, in you case the
Gross Profit is:-

\(\displaystyle \frac{269,100-35,200}{35,200} × 100 =\frac{233,900}{35,200} × 100 \approx 664.5\)%

Frankly, you are making far too much money for someone who has such a poor grasp of business principles! 🤣
 

The Highlander

Junior Member
Joined
Feb 18, 2022
Messages
245
My great confusion comes in when I try, as a hypothetical test, to sell for the same cost as production ($35200 sold for $35200). This is obviously a profit of zero but comes out as 100%, I know 35200 is 100% of 35200 but Im trying to derive the sales profit and not the value of one figure against another.
If you take the difference between 35,200 and 35,200 (ie: 0) then you will get the correct answer (that you expected):-

\(\displaystyle \frac{SALES-COGS}{COGS} × 100 =\frac{35,200-35,200}{35,200} × 100 =\frac{0}{35,200} × 100 = 0\)%
 
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Garth Vader

New member
Joined
Aug 5, 2020
Messages
11
Let P = profit per unit sold, C = cost per unit sold, and S = sales price per unit sold.

Can you relate those three variables in a single equation?

Based on that formula, how would you express profit as a percentage of cost.

If you can do those two steps, I suspect that you will soon see what is wrong with your formula.
Thank you for your help.
 

Garth Vader

New member
Joined
Aug 5, 2020
Messages
11
I’m afraid neither of your approaches is correct.

To calculate
Gross Profit you take the difference between what you sell something for (TOTAL SALES) and what it cost to produce (COGS) as a percentage of what it cost to produce (ie as a %-age of COGS). See diagram (below).

So, in you case the
Gross Profit is:-

\(\displaystyle \frac{269,100-35,200}{35,200} × 100 =\frac{233,900}{35,200} × 100 \approx 664.5\)%

Frankly, you are making far too much money for someone who has such a poor grasp of business principles! 🤣
Thank you for your reply and help Highlander.
 

Harry_the_cat

Elite Member
Joined
Mar 16, 2016
Messages
3,352
Right. So 100% profit means you have doubled your money.
Do you still think it is reasonable that if cost is $35200 and you sell for $269100, then you have made 86.9% profit??
It's way more than double, so is way more than 100% profit.
You want to calculate \(\displaystyle \frac{profit}{cost} *100\)%.
 

Garth Vader

New member
Joined
Aug 5, 2020
Messages
11
Right. So 100% profit means you have doubled your money.
Do you still think it is reasonable that if cost is $35200 and you sell for $269100, then you have made 86.9% profit??
It's way more than double, so is way more than 100% profit.
You want to calculate \(\displaystyle \frac{profit}{cost} *100\)%.
Ok, yes, I see your logic, that didnt even occur to me.
Thanks for your help.
 

The Highlander

Junior Member
Joined
Feb 18, 2022
Messages
245
Yes, Emily, we can (almost) all calculate percentages in here but we don’t, freely, give out “answers”; the aim of the site is to provide HELP (the clue is in the site name) so that new members can solve their particular problems themselves! (Give a man a fish and you feed him for a day. Teach him how to fish and you feed him for life!).

Did you read the Posting Guidelines before you made your first post; please do so now.

In this particular thread the OP’s problem has been addressed by several different members, in several different ways already and it’s doubtful whether your contribution adds much to the discussion. Especially since you don’t appear to fully understand the Accounting terms you are bandying about. You cannot talk about “Net” Profit because no information has been provided about the Cost of Sales or any Overheads or Fixed Costs that may not have been included in the Cost of Production! That is why I referred to the difference between what the Manganese Alloy “
sells” for and what it “costs to produce” as the Gross Profit (nor do you appear to understand what a Profit Margin is!).

Did you read all the other Posts in the thread before you added yours?

Do you have a particular problem that you need help with or did you just join the Forum to share you wealth of wisdom?

Again, please read the Posting Guidelines before making any further posts.

Thank you.
 
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