Calculate gross profit and net profit.
DefinitionCalculation should include income, cost of merchandise, and operating expenses. Gross profit is sales minus the cost of goods sold. Net profit is gross revenue minus all expenses.
- How do fashion businesses use their profit?
- What is the relationship between markup and gross profit?
- What is the difference between gross and net profit? Which is true profit? Why?
- What are typical operating expenses of a fashion marketing business?
- What are some examples of fixed and variable costs in a fashion marketing business?
- How does profit relate to markup?
- What expenses are incurred in overhead?
- What are allowances, and how do they affect a retailer’s profit?
Related Standards of Learning
The student will
- represent verbal quantitative situations algebraically; and
- evaluate algebraic expressions for given replacement values of the variables.
The student will solve
- multistep linear and quadratic equations in one variables algebraically;
- quadratic equations in one variables algebraically;
- literal equations for a specified variable;
- systems of two linear equations in two variables algebraically and graphically; and
- practical problems involving equations and systems of equations.
Other Related Standards
Economics and Personal Finance Standards of Learning
The student will demonstrate knowledge of the role of producers and consumers in a market economy by
- describing how consumers, producers, workers, savers, investors, and citizens respond to incentives;
- explaining how businesses respond to consumer sovereignty;
- identifying the role of entrepreneurs;
- comparing the costs and benefits of different forms of business organization, including sole proprietorship, partnership, corporation, franchise, and cooperative;
- describing how costs and revenues affect profit and supply;
- describing how increased productivity affects costs of production and standard of living;
- examining how investment in human capital, capital goods, and technology can improve productivity;
- describing the effects of competition on producers, sellers, and consumers;
- explaining why monopolies or collusion among sellers reduces competition and raises prices; and
- illustrating the circular flow of economic activity.
The student will demonstrate knowledge of the price system by
- examining the laws of supply and demand and the determinants of each;
- explaining how the interaction of supply and demand determines equilibrium price;
- describing the elasticity of supply and demand; and
- examining the purposes and implications of price ceilings and price floors.