Abstract
I was conducting interviews with clients of a well-established accounting practice, following a client seminar the previous day. The owner of a jewelry shop had requested an interview session.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Gross profit, gross profit contribution , or simply contribution all refer to the amount left over from a sale after deducting the cost of goods. It is a “contribution” toward covering expenses and profit. Obviously, contribution will be impacted by discounting and/or low numbers of sales.
- 2.
Markup refers to the amount added on to the cost price to get the sales price. As a percentage on cost, it is referred to as markup. Gross profit contribution refers to a percentage of the sale price. In dollar terms, gross profit and markup refer to the same amount. For example, a ring costing $100 is marked up 100% to sell for $200. The gross profit contribution of $100 is calculated by dividing the cost price by the sale price and pressing the percentage button ($100 ÷ $200 = 50%).
- 3.
It is worth noting that the sample analysis could have extracted the number of items sold per sale, seeing as a sale frequently includes more than one item. In the case of comparing two or more retail outlets of similar products, the items per sale can be a very useful comparison of merchandising techniques. Volume of sales can be similar, but gross profit per sale noticeably different, because one outlet is more conscious of the added value per sale than the other.
- 4.
The average sale in Table 8-1 is $30.62 ($7,900 ÷ 258); the average number of sales per day is 43 (258 ÷ 6 days).
- 5.
40% gross profit margin increases the previous GP margin of 38%.
- 6.
258 ÷ 6 days = 43.
Author information
Authors and Affiliations
Rights and permissions
Copyright information
© 2013 Keith N. Cleland
About this chapter
Cite this chapter
Cleland, K.N. (2013). Jeweler’s Changed Focus Turns Red into Black. In: IMPROVING PROFIT. Apress, Berkeley, CA. https://doi.org/10.1007/978-1-4302-6308-1_8
Download citation
DOI: https://doi.org/10.1007/978-1-4302-6308-1_8
Published:
Publisher Name: Apress, Berkeley, CA
Print ISBN: 978-1-4302-6307-4
Online ISBN: 978-1-4302-6308-1
eBook Packages: Business and EconomicsBusiness and Management (R0)Apress Access Books