## Explanation of each column on the Profit Analysis Report (Estimated and Actual)

Modified on: 2017-11-29 15:57:08 -0500

The Profit Analysis Report compares estimated cost, price, and profit figures to actual cost, price, and profit figures.

The Estimated figures come from what is typed in as the proposal price (estimated price) and the estimated (PO cost) in project specifications.

The Actual figures come from the cost that is entered via vendor invoice and what is invoiced (charged) to the client?

Estimated Cost:  This is the cost typed in on the component window when entering the item.  It is the amount that prints on the PO.

Actual Cost: This is the amount paid to the vendor.  This amount does not include vendor deposits paid (not until the final invoice is entered) but only what is paid after the final vendor invoice is entered.  This amount will be zero until an invoice is entered against a PO from a vendor. For example, you may estimate that a chair costs \$850.00 and then when the vendor sends you the bill for the chair it turns out that it was on sale and only cost you \$800.00.  Your estimated cost = \$850.00 and your actual cost = \$800.00.

Estimated Price:  This is the price of the item as entered in project specifications.  It is the price that prints on the Proposal to the client.  For example: if a chair is estimated at \$850.00 with a 30% mark-up then the estimated price would be \$1105.00.

Actual Price:  This the price invoiced to the client.  The invoice price can be the same as the estimate price or can include additional charges or discounts.  This price will be zero until the item is invoiced to the client.  If invoice pricing is set to ?always proposal (estimate)? then when the client is invoiced for our chair the actual price would be \$1105.00.  If we pass our savings to the client then the actual price would be \$1040.00 or \$800.00 marked up by 30%.

Estimated Profit:  This is the difference between the Estimated Price and the Estimated Cost or the estimated amount of dollars that you will make on the goods.  In our example this would be 1105 minus 800 or \$255.00 profit.

Actual Profit:  This is the difference between the Actual Price and the Actual Cost or the actual amount of dollars that you will make on the goods.  In our example, the chair only really costs us \$800 (because of the sale) and if we charge the original \$1105.00 then we would have a slightly higher actual profit, this would be 1105 minus 800 or \$305.00 profit.

Gross Profit Percentages:  Gross profit is the percentage of profit as compared to the price.  GP% = (price - cost) / price or profit / price.  A 30\$ mark-up translates roughly to a 23% gross profit; in our example \$255.00 is 23.1% of \$1105.00.

Mark-up Percentages: Mark-up is the percentage that the cost is increased to achieve the price.  This is the same as the percentage that you set when entering the specifications to calculate the price from the cost.  In our example our \$255.00 profit is 30% of \$850.00.

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