Tag Archives: gross profit

Prepare A Break-Even Analysis

Before deciding to push on a movie business you should make a deliberate financial planning –  break-even analysis. Like any business movie business has a common business rules in terms of law.

Do some serious research — including an analysis of your market — to determine your projected sales volume and your anticipated expenses. Make a research and grab some business plan books and software to make reasonable revenue and cost estimates.

For your further estimations you’ll need to make the following calculations:
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  • Fixed costs.Fixed costs (sometimes called “overhead”) don’t vary much from month to month. They include rent, insurance, utilities, and other set expenses. It’s also a good idea to throw a little extra, say 10%, into your break-even analysis to cover miscellaneous expenses that you can’t predict.

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  • Sales revenue. This is the total dollars from sales activity that you bring into your business each month or year. To perform a valid break-even analysis, you must base your forecast on the volume of business you really expect — not on how much you need to make a good profit.

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  • Average gross profit for each sale. Average gross profit is the money left from each sales dollar after paying the direct costs of a sale. (Direct costs are what you pay to provide your product or service.) For example, if Antoinette pays an average of $100 for goods to make dresses that she sells for an average of $300, her average gross profit is $200.

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  • Average gross profit percentage. This percentage tells you how much of each dollar of sales income is gross profit. To calculate your average gross profit percentage, divide your average gross profit figure by the average selling price. For example, if Antoinette makes an average gross profit of $200 on dresses that she sells for an average of $300, her gross profit percentage is 66.7% ($200 divided by $300).

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