M4

The effect profit has when revenue isn't high


The lower the revenue the lower the profit because the revenue is the money coming back from selling products. and for every product they sell they make a slight profit on it, but wages and bills have to be taken into account and extra costs for if things have broke so the more extra things that need money from the business will mean that the revenue pot of money wont be as big their for if its all added up they may not have actually have the profit money in the total because of the extra costs. For example co-op planned that the sales revenue would be £110,650 and their profit would be £18,338 because of their high predicted sales revenue total, they actually made £80,260 and their profits went into the minuses -(£28,360) so you can see from the numbers that the lower the sales revenue the lower the profit.


How changes to cost impact on profitability


co-op budgeted on what they wanted to spend in some cases they paid less but in other areas they spent a bit more than they planned. The planned to spend £92,312.00 when they actually ended up spending £108,620.00 that means that they have had to pay more out of their pocket meaning that they are spending some of their profit to pay bills.


The cause of the actual


the main factor is that they didn't sell as many units as they planned to sell which means that straight away the sales revenue and profits will go down meaning that they need to bring more customers in so they discount some items and do offers meaning that their profit that they are making on items arnt as big as they would like it to be. they may have had to rise their pay of wages to keep staff their because it might be quite dead meaning that they are getting fed up.