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Cost of Goods Sold formula

7662 Views 1 Reply 2 Participants Last post by  out da box
Hello fellow screen printers and business people! I first want to thank all of you for your insight and opinions about our business! You all have been very helpful! I have been wrestling with a question and need some help...
I own a screen printing business with 1 auto and 1 manual press. I have 5 employees. I am selling my garments at asi pricing (double cost) and my printing prices are by local comparison on the higher end. We do a fair amount of contract work. Yet...I always have cash flow problems! So...I have set my mind to figure what my gross profit is. I have a feeling that I spend too much time on jobs that are below what I need to have as profit.
So...I know I need to figure COGS and to include all costs associated with a particular job. Because it's hard to figure exactly how much ink is used per job I have seen different "approx" numbers that can be used. And that's really about as close as one can get. One question is how long a job takes so you can quantify the labor charges. I don't know about anyone else but I find it hard to determine a labor charge for a job. There can be distractions that take the operator off the press, or breaks or the need to stop the job to catch for the other press, etc... I have asked my production supervisor to fill out charts but they really don't make any sense when comparing two similar jobs. Does anyone have a chart or (?) that helps them with this? One way I have tried this is to take the total jobs finished for the day and divide that by the number of total labor hours for the day. Does this make sense?
Basically I know I need to only do jobs that produce a certain gross profit. Has anyone gone through this exercise to determine their gross profit per job? Is it smart to bypass work that doesn't kick in enough gross profit to keep the business rolling? Any help on this would be much appreciated...I need the sleep!
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Good strategy. You can't win on price alone. Charge!
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