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Net Profit pp. 522-524 16-3 SECTION SECTION
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Net Profit pp. 522-52416-3SECTIONSECTION
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Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 2 of 18
16-3Key Words to KnowKey Words to Know
operating expenses (p. 522)The costs of running a business, such as salaries, rent, utilities, and taxes, also called overhead.
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Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 3 of 18
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How do I calculate overhead expenses?Overhead = Selling Price × Overhead Percent
How do I calculate the net profit?Net Profit = Markup – Overhead
FormulasFormulas
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Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 4 of 18
16-3
Sport Shop purchases water tubes for $44.98 each.It sells the tubes for $89.99 each. The owner estimates the overhead expenses to be 40 percent of the selling price of the merchandise.What is the net profit on each tube?
Example 1Example 1
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Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 5 of 18
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Find the markup.Selling Price – Cost $89.99 – $44.98 = $45.01
Example 1 Answer: Example 1 Answer: Step 1Step 1
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Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 6 of 18
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Find the overhead.Selling Price × Overhead Percent$89.99 × 40% = $35.996 or $36.00
Example 1 Answer: Example 1 Answer: Step 2Step 2
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Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 7 of 18
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Find the net profit.Markup – Overhead $45.01 – $36.00 = $9.01
Example 1 Answer: Example 1 Answer: Step 3Step 3
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Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 8 of 18
16-3
Anamarie’s Shoppe buys chemises at a cost of $12.78. Anamarie’s sell the chemises at a selling price of $24.49. Its management estimates the overhead expenses to be 34 percent of the selling price of the merchandise. What is the net profit on each chemise sold?
Example 2Example 2
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Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 9 of 18
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Find the markup.Selling Price – Cost $24.49 – $12.78 = $11.71
Example 2 Answer: Example 2 Answer: Step 1Step 1
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Copyright © Glencoe/McGraw-Hill MBA, Section 16-3, Slide 10 of 18
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Find the overhead.Selling Price × Overhead Percent$24.49 × 34% = $8.3266 or $8.33
Example 2 Answer: Example 2 Answer: Step 2Step 2
523-524: 1-12
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