Total Revenue: This is the total amount you sold, which in your case is $100,000. Total Costs: These are your expenses, including COGS (Cost of Goods Sold) and salaries, which total $40,000 in your scenario. Gross Profit: This is what you earn after subtracting the costs from the revenue. In your case, $100,000 (revenue) - $40,000 (costs) = $60,000 gross profit.
Now, to find out how much you earn back for every dollar you spend, you divide the gross profit by the total costs:
Return per Dollar Spent = Gross Profit / Total Costs In your case:
Return per Dollar Spent =$60,000 / $40,000 = 1.5
So, for every dollar you spend in this area of your business, you actually get $1.50 back. This means you are making a 50% return on each dollar spent.
Total Revenue: This is the total amount you sold, which in your case is $100,000.
Total Costs: These are your expenses, including COGS (Cost of Goods Sold) and salaries, which total $40,000 in your scenario.
Gross Profit: This is what you earn after subtracting the costs from the revenue. In your case, $100,000 (revenue) - $40,000 (costs) = $60,000 gross profit.
Now, to find out how much you earn back for every dollar you spend, you divide the gross profit by the total costs:
Return per Dollar Spent = Gross Profit / Total Costs
In your case:
Return per Dollar Spent =$60,000 / $40,000 = 1.5
So, for every dollar you spend in this area of your business, you actually get $1.50 back. This means you are making a 50% return on each dollar spent.