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How to work out cost plus profit?

Hey!
No need to tell me the answer , but would love it if somebody could give me some hints on how to work it out!

How do i work out the price per article , with a cost plus proit basis?
2000 articles to be produced
Fixed costs : £2500
Variable costs : £5 per article
Anticipated profit: £1500

Thanks!

Reply 1

marieisfab

Work out your total costs (fixed and variable) and then add the profit. This is total you need to make for ALL of your items.

Reply 2

turn and fall

profit = total revenue - total cost???????

Reply 3

Zoof

Original post by marieisfab

Work out your total costs (fixed and variable) and then add the profit. This is total you need to make for ALL of your items.

Cheers!
Another question , which may sound stupid to people who have done economics for awhile - but whats the point of working out cost plus profit? What benefit does it have.

Cheers :smile:

Reply 4

marieisfab

Original post by Zoof

Cheers!
Another question , which may sound stupid to people who have done economics for awhile - but whats the point of working out cost plus profit? What benefit does it have.

Cheers :smile:

I don't do economics, so to be honest, I'm not sure what the answer for that would be. From an accounting perspective it's better for decision making purposes and cash flow predictions. There is a page on Wikipedia about cost-plus pricing, but I'm not too sure about how accurate it is (because as we all know, wiki is the worst thing in the world blah blah blah).

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