The Profit & Loss account for any period must have a logical format. The format shown below is a good one- it keeps the thinking clear & helps one know where one needs to improve.

The last 4 columns shown below is a good way to analyse your P&L account. Remember- Overheads- is a much misunderstood word. Overheads are the untraceable costs of a business. (You cannot trace any overhead cost to the final product.) Overheads contain the most productive resource, the managers, researchers, planners, designers, innovators. It may also, however, contain purely parasitical, if not destructive, elements in the form of high-prices personnel needed only because of malorganisation, poor spirit, or confused objectives, that is, because of mismanagement In short, the Overheads are not to be taken lightly.

1 Sales Assumed Figures If Selling prices go up by 1%, then PBT goes up by 11.85% If Raw Material costs reduce by 1%, then PBT goes up by 8.29% If Sales go up by 1%, then PBT goes up by 3.56% If Overheads reduce by 1%, then PBT goes up by 1.15%
2 Sales of Product A
3 Sales of Product B
4 Sales of Product C
5 Total Sales ( Net of GST) 100.00 101.00 100.00 101.00 100.00
6 Raw Material Consumed
7 Raw Material – Product A
8 Raw Material – Product B
9 Raw Material – Product C
10 Total Raw Materials consumed 70 70 69.3  

70.70

 

 

70

 

11 Gross Contribution ( Sales – RM) 30 31 30.70  

30.30

 

 

30

 

12 Variable Costs other than Raw Material Cost
13 Carriage Outward
14 Carriage Inward
15 Octroi on Raw Material
16 Packing material – All Products
17 Electricity charges
Processing charges
19 Sales commission
20 Spares & Consumables ( including developments)
21 Casuals used for production
Total variable cost other than RM Cost 5.50 5.50  

5.50

 

5.50 5.50
23 Net Contribution   

24.5

 

25.5  

25.20

 

 

24.80

 

 

24.50

 

24 Overheads
25 Payment to Workers
26 Payments to Staff
27 Travelling General
28 Conveyance
29 Telephone exps
30 Legal & Professional Fees
31 Vehicle Maint & Petrol
32 Sales tour exps
33 Office & Fact maint (including safety exps)
Printing & stationery
35 Insurance
36 Travelling Directors
37 Courier
38 Interest on HP vehicles
39 Rent,Municipal & Vehicle taxes
40 Statutory & Internal Adit fees & audit exps.
41 Advertisement
42 Bank charges
43 Computer Repairs & Maintenance, Soft ware charges
44 Water charges
45 Listing fees, Director’s Sitting fees & Demat Charges
46 Octroi on FG
47 Other Misc exps
48 Rights Issue Expenses
49 Foreign Tour Exps
50 Sub Total overheads Sr. No.25 to 50 13.06 13.06 13.06 13.06  

 

12.93

 

 

51 Bad Debts ( 1 % of sales)  

1.00

 

1.00 1.00 1.00 1.00
52 Total overheads 14.06 14.06  

14.06

 

14.06  

13.93

 

53 PBIDT 10.44 11.44  

11.14

 

10.74  

10.57

 

54 Interest Cost
55 Bank Interest 1 1 1 1  

1

 

Interest on Directors deposits
57 Processing fees paid to Bank
Documentation charges for bank loan
59 Total Interest Cost 1 1 1 1 1
60 Net Profit after Interest, before depreciation and Taxes 9.44 10.44 10.14 9.74 9.57
61 Add Subsidy Received
62 Add /(Less) – Profit / Loss on Sale of Fixed Assets
Net Profit after Interest, before depreciation and Taxes 9.44 10.44  

10.14

 

9.74  

9.57

 

64 Depreciation  

1

 

1 1 1 1
65 PBT 8.44

 

9.44

 

9.14

 

8.74

 

8.57

 

See the effect of the last 4 columns on your P&L a/c.