Financials

We have talked extensively how to figure out the cost of making your product and putting together the product budget. We discussed direct material, direct labor and overhead cost. Knowing your product cost will ensure that you price your product high enough to fully recover the cost. Computing product cost Most entrepreneurs struggle with how to price their product. By taking the time to create a budget, you can quickly

Previously, we talked about how to predict cost of goods sold. In this article, we discuss how to predict direct material cost in a product business. Specifically, we will be using a bakery as our example. As we learned from the previous article cost of goods sold consists of: Direct material Direct Labor Applied overhead I will take each of these components and discuss them in more details below. Direct

Previously,  we talked about estimating direct material for a product based business, now we shift our attention to direct labor. There are two main factors one must consider when deciding how much labor is needed to meet the sales forecast. Every business must consider: Number of hours needed Price per hour Number of hours needed: The automate versus hire decision Every business faces a decision when it comes to labor.

If you are in business, you have heard of the terminology cost of goods sold. But what exactly is it? In a product based business, cost of goods sold is the inventory you have sold to your customers. Before inventory is sold, the cost sits on the balance sheet as "merchandise inventory" and when sold, it moves to the profit and loss statement as "cost of goods sold". In a

Every business owner will like to make more profits, but becoming the master of your business is a disciplined act. You can never master your business if you do not take the time to plan and execute. In this series, I am going to take line items from the financial statements and discuss how to use KPIs to determine those numbers. I start with revenue on the income statement, and