PROFIT

Lesson Objectives

Distinguish between costs, revenue, and profit

Explain how profits keep a business viable

Explain why it is necessary and desirable for some businesses to be not-for-profit

Key Vocabulary Terms

Bequests Cost Endowment Not-for Profit

Organization

Profit Profit Margin Revenue

Cost, Revenue, and Profit

Profit Cost Revenue These will be the answers to the following

questions

Cost, Revenue, and Profit

The school football team is discussing a possible fundraising event. They have decided on a school wide barbecue. Hot dogs, buns, and condiments will run the team about $400 and the local grocery store has agreed to donate water and sodas. (Cost)

Teachers and parents have offered to volunteer their time and grills to help with the event, and the barbecue will be held on the school football field during lunch. (Cost)

The team decides to sell tickets for $4 per person, and 350 students have prepurchased their tickets. (Revenue)

The event is a success! After subtracting the amount that is spent on supplies, the team earns almost $1,000. (Profit)

Cost, Revenue and Profit

Cost is the expense required to acquire or produce something. Think about compact discs (CDs). The company that produces the CD pays employee salaries, rent, equipment, and resources needed to produce the finished product. If the expense required to make 50 CDs is $300, the cost to make one CD is $6 ($300/50).

Cost, Revenue, and Profit

Sales revenue is the money a business receives when it sells a product or service.

For example, if a company that produces CDs receives $9 for each CD it sells to your local music store, that $9 is considered sales revenue. (Of course, your local music store sells it to

you for considerably more since they have their own costs to cover.)

Cost, Revenue, and Profit

Profit is sales revenue less cost. The profit for our CD company is $3 per

CD, which we calculate by subtracting costs from revenue ($9 - $6 = $3).

Profit is also sometimes referred to as net income.

Cost, Revenue, and Profit

Profit margin is a measure of a company’s profitability, usually measured as a percentage.

In the example above, the profit margin is 33% (profit divided by revenue).

Cost, Revenue, and Profit

If you owned a sporting goods store, what types of costs would you incur?

How would you calculate your revenue? Your profit?

What can you list as the benefits of profit? Profits enable businesses to prosper and grow,

which provides jobs for employees, allows needed goods and services to be produced, helps suppliers get more business, creates tax revenue for cities, counties, states, and the federal government, etc.

Profits are essential for a healthy business and a healthy economy!

Profit

One of the goals of most companies is to earn a profit

The football team from the previous example did so well with the school barbecue that they are thinking of selling hot dogs every Friday

Profit

Download- Worksheet: What’s the Profit? Which groups thought that Friday barbecues

would be a good money-making venture for the school football team?

Profit

Download- K-W-L Chart: Profit Download- Reading: Profit One thing this reading taught us about

profit is…

Planning a Fundraiser

Download- Assignment: Planning a Fundraiser Each group needs to choose a club, team,

organization, or charitable cause for which to raise money.

Work as a group to identify a way to raise the money and evaluate the costs, revenue, and potential profit so that they can determine if the fundraiser will be successful

Planning a Fundraiser

Choose four or five different plausible fundraising activities

Work together to predict revenue and profit for each of the activities It is very important to be as accurate as

possible with costs, because they have such an impact on the profit margin.

Use the results of their predictions to decide which fundraiser would be most effective for your cause

Planning a Fundraiser

Which cause did you chose to work on? Which fundraiser did you decided on? What is your estimated cost, revenue,

and profit are for that fundraiser?

Not-for-Profit

Not-for-profit organizations are very important to the US economy. [True]

Not-for-profit groups have no shareholders. [True]

Not-for-profit organizations must pay taxes. [False]

Not-for-Profit

Religious organizations do not qualify as not-for-profit organizations. [False]

The ultimate goal of any not-for-profit organization is to make money. [False]

Not-for-Profit

Make predictions on what a not-for-profit organization is. not-for-profit-often those formed to provide

a public service—are intentionally set up to not make a profit American Lung Association, Engineers Without

Borders, Seeds of Peace, Salvation Army, Shriner’s Hospital for Children, NAACP, National Audubon Society, United Way, etc

Not-for-Profit

You are going to learn about not-for-profit organizations, their financing methods, and the difference between not-for-profit and for-profit organizations

Download- Reading: Not-for-Profit Organizations Read and list the article subheadings in their

notebooks Read the article Review the text and list three to four key words from

each subheading Write one to two sentences summarizing each

subheading, using at least two of the key words

Closure

If you had the choice to work for a for-profit or not-for-profit organization, which one would you choose? Explain your reasoning.

Presentation

Research non-profit organizations in the south jersey area

Create a PowerPoint presentation describing the non-profit organization

Work in pairs Include

Name Purpose History Current state of the organization Predict what would happen if this organization were

forced to turn a profit.

Enrichment

Conduct additional studies of not-for-profit organizations in the community

Write individual reports or create a PowerPoint sharing key information about the organizations.

Enrichment

Research what is needed to form a not-for-profit or a for-profit company

Create posters detailing what is required.