(Typing, etc.) 50,000 75% 37,500

Studies, Consultations 527,000 0% 0

TOTAL $677,000 $57,500

Total Average Cost of Sales = 8.5%

($57,500 divided by $677,000)

WarningInclude piece-rate and commission costs. Note that some businesses pay workers on a piece-rate or commission basis. All your costs that vary with each sale should be in cost of sales instead of fixed expenses.

When youve completed your cost of sales calculations, you are ready to prepare your Profit and Loss Forecast.

D. Complete Your Profit and Loss Forecast

You will find a blank Profit and Loss Forecast form in Appendix 4. Follow the line-by-line instructions below to complete your form.

NoteNote for computer users: If you want to use a computer spreadsheet instead of the Profit and Lost Forecast form, set it up with all of the same categories as the blank Appendix 4 form.

1.Sales Revenue. You have completed this estimate already. Simply enter the total sales revenue dollars for each month for two years from the Sales Revenue Forecast you completed

WarningHeres another chance to revise the sales revenue numbers in case you think they need work. However, be sure you really believe that you can generate all the revenues you forecast. Make sure you dont do it backwards by writing down enough sales revenue to show the profits you want. Otherwise, youll have to explain to your backers each month why things arent as good as you said they would be.

2.Cost of Sales. Enter your monthly dollar cost of sales. To get these figures, multiply your monthly sales revenue forecast by the average cost of sales percentage you developed in C, above. Returning to our dress shop example, Antoinette would multiply her monthly sales figure estimate by 60% (or 0.6). For example, if March sales are forecast at $30,000, the cost of sales for March would be $18,000 (0.6 x 30,000 = 18,000).

WarningIf you made separate forecasts of sales revenue, cost of sales and gross profit for each product line, then add together all the gross profit numbers and enter them on a summary form line 3. You will have prepared separate forms for each product line for the first three lines (sales