can someone do a simple sum for me. i think my brain has stopped working

[fordie]

for some reason i can't seem to get my head around this and i'm starting to think i'm being a bit thick!

If i buy something for lets say £2.00 and sell it for £4.50 I am making a gross of £2.50, which is 125% profit margin. firstly is that correct(!)

so if i sell all of my products at this 125% margin, how much would I need to sell in order to make a £25,000 gross profit. and if you could tell me the calculation i'd be even more grateful!

for some reason i can't seem find a calculation to do this. ive been at work all day and i fear my brain has stopped working in this heat

I assume that if i sold things at 100% I would need to sell £50,000 worth of things to get the £25,000 (the other £25,000 being for the cost of the items to buy). So I know i wouldn't have to sell £50,000 because i'm selling them at a greater profit margin, but i don't know the exact figure on the calculation to do it!

am i being stupid here?

I almost spelled stupid wrong, i had to go back and change it!

 

[fordie]

hang on, is the answer 45,000?

if i need to make a 25k profit, using 125% profit margin, do i need to take 45,000? have a cracked it?

 

[estwig]

£25,000.00 divided by £2.50 profit per unit, means you need to sell 1000 units.

You need to consider tax, overheads, etc.

 

[Faith28]

The first bit:

I thought profit margin was the proportion of the total sale price, £4.50.

Therefore a profit margin is (4.5-2)/4.5= 55%

A 55% profit margin on gross profit is good - assuming £2 is total cost of sales.

 

[RLD Plastering and Tiling Services]

Don't know if this is the correct calculation but by my working out you would need to sell £45,000 worth of product this would be £20,000 on materials and your 125% profit equals £25,000. To reach this I just worked out what 125% of £20,000 would be and hey presto it was £25,000 and £45,000 / 2 = 22,500 units.

Thanks

 

[Faith28]

I think you are thinking of turn over - the amount you need to sell to receive £25,000 gross profit.

At £4.50 you will need to sell 10,000 units times 4.5 = £45,000 of which £25,000 is gross profit.

 

[Faith28]

Don't know if this is the correct calculation but by my working out you would need to sell £45,000 worth of product this would be £20,000 on materials and your 125% profit equals £25,000. To reach this I just worked out what 125% of £20,000 would be and hey presto it was £25,000 and £45,000 / 2 = 22,500 units.

Thanks

You beat me to it

 

[RLD Plastering and Tiling Services]

You beat me to it

Even suprised myself with that one

 

[Faith28]

£25,000.00 divided by £2.50 profit per unit, means you need to sell 1000 units.

You need to consider tax, overheads, etc.

You mean 10,000 units.

Gross profit is before overheads are taken into account - then it's net profit.

 

[fordie]

thanks for your help, but its suddenly just dawned on me.
if i divide what profit i need by 1.25 then add it to itself i get the answer!