Learning Area Entrepreneurship Grade Level 11 and 12

W4 Quarter 4th Date Week 4

I. LESSON TITLE Computing for Profits
II. MOST ESSENTIAL LEARNING
Demonstrate understanding of the 4 M’s of Operations
COMPETENCIES (MELCs)
III. CONTENT/CORE CONTENT • Describe net income
• Differentiate gross, operating, and net profit
• Compute for profits

IV. LEARNING PHASES AND LEARNING ACTIVITIES

I. Introduction (Time Frame: 10 min.)

If revenues and expenses should turn out to be equal, the company will have broken even. Net income is one of the
most important indicators of the financial health of a business. The first is the pre-tax income, which is the amount the company
earned before taking taxes into account.

In our previous topic, you have learned about forecast revenue and cost to be incurred, forecasting problems, and the
benefits of financial forecasting. You were able to explain why these are important in businesses and the objectives behind a
company’s core principles. To review this, answer briefly the following questions below. Write your answer on a separate sheet
of pad paper.

1. What is forecasting revenue? How is it important to entrepreneurs?

2. Why do we need to forecast the cost to be incurred in a business?
3. What are the costs associated with forecasting?
With the knowledge you have right now, we will proceed with our next lesson.
D. Development (Time Frame: 50 min.)

PROFIT/ NET INCOME

Profit describes the financial benefit realized when the revenue generated
from a business or activity exceeds the expenses, costs, and taxes involved
in sustaining the activity in question. Any profits earned funnel back to
business owners, who choose to either pocket the cash or reinvest it back
into the business.
Figure1 https://bit.ly/3vi2XPA

What Does Profit Tell You?

Profit is the money a business pulls in after accounting for all expenses. Whether it's a lemonade stand or a publicly traded
multinational company, the primary goal of any business is to earn money, therefore a business performance is based on
profitability, in its various forms.

Some analysts are interested in top-line profitability, whereas others are interested in profitability before taxes and other
expenses. Still, others are only concerned with profitability after all expenses have been paid.

The three major types of profit are gross profit, operating profit, and net profit--all of which can be found on the income
statement. Each profit type gives analysts more information about a company's performance, especially when it's compared
to other competitors and periods.

Figure 2...Profit http://bit.ly/3s5v5UP

IV. LEARNING PHASES AND LEARNING ACTIVITIES
Gross, Operating, and Net Profit

1. Gross profit is the sales minus the cost of goods sold. Sales are the first line item on the income statement, and the cost
of goods sold (COGS) is generally listed just below it.

Formula: Gross Profit=Total Sales−COGs

2. Operating profit is calculated by deducting operating expenses from gross profit. Gross profit looks at profitability after
direct expenses, and operating profit looks at profitability after operating expenses.

Formula: Operating Profit=Gross Profit−Operating Expenses

3. Net profit is the income left over after all expenses, including taxes and interest, have been paid.

Formula: Net Profit=Operating Profit−Taxes & Interest

(For more information, click the link below)

LINK: http://bit.ly/3viJfUr

Computing for Profit

The simplest formula in computing the profit is by subtracting total expenses from total revenue as shown in the box. The
computation of profit is by deducting direct costs and indirect costs (also known as overheads) from sales (Informi, 2020). Direct
costs are expenses that directly go into producing goods or providing services such as labor, materials, and other
manufacturing supplies; while indirect costs are the general business expenses that keep the business operations such as rent,
utilities, and general office expenses (Blakely-Gray,2018)

This simplest formula is total revenue – total expenses = profit. Profit is calculated by deducting direct costs, such as
materials and labor, and indirect costs (also known as overheads) from sales.

Total revenue
- Total expenses
PROFIT

Figure 3. Net Profit. http://bit.ly/3tBpztr

Based on the normal accounting guidelines, sales and expenses are included in profit on the day they occur, not on the
day of actual payment so profit will include credit sales and purchases even when they are not yet paid.

Here is an example:
A business buys 3,000 of stock in October and agrees to pay for it in three months. It sells the stock in the month in which it
was purchased (October) for 5,000 cash. The profit for the month is 2,000. Even the reality that the stock was not paid for
immediately is not important when calculating profit.
IV. LEARNING PHASES AND LEARNING ACTIVITIES
E. Engagement (Time Frame: 20 min.)

Learning Task 1. Compute for Profit. Based on the given data, compute for the profit using the formula discussed earlier. Show
your solution on a separate sheet of paper.

Sales 50,000.00
Paid Rent : 2,500.00
Paid utility fees : 4,679.18
Supplies : 10,789.86
Delivery cost : 589.00
Employees’ salary :
A. 450.00 (15days) (4 persons)
B. : 650.00 (15days) (1 person)
Income : ?

A. Assimilation (Time Frame: 20 min.)

Learning Task 2. Graphic Organizer. Explain the similarities and differences between gross, operating, and net profit. Write the
answer on a separate sheet of paper.

Figure 4. Profit.http://bit.ly/39gYQeb

V. ASSESSMENT (Time Frame: 15 min.)

(Learning Activity Sheets for Enrichment, Remediation, or Assessment to be given on Weeks 3 and 6)

Learning Task 3. TRUE or FALSE: Read carefully each statement. Write T if the statement is correct and F if it is wrong. Write your
answer on a separate sheet of paper.

1. Based on the normal accounting guidelines, sales and expenses are included in profit on the day they occur.
2. Direct costs are expenses that directly go into producing goods or providing services such as labor, materials, and
other manufacturing supplies.
3. Indirect costs are the general business expenses that keep the business operations such as rent, labor costs, and
general office expenses.
4. The simplest formula in computing the profit is by subtracting total expenses from total revenue.
5. Each profit type gives analysts more information about a company's performance, especially when it's compared to
other competitors and periods.

Learning Activity 4. Watch the YouTube videos using the links provided. Write down all the benefits derived from the profits in
a business. Write your answer on a separate sheet of paper.
1. https://bit.ly/32SS5eD
2. https://bit.ly/3nsRf1O
IV. LEARNING PHASES AND LEARNING ACTIVITIES
VI. REFLECTION (Time Frame: 5 min.)
• Communicate your personal assessment as indicated in the Learner’s Assessment Card.

Personal Assessment on Learner’s Level of Performance

Using the symbols below, choose one which best describes your experience in working on each given task. Draw it in the column
for Level of Performance (LP). Be guided by the descriptions below:
 - I was able to do/perform the task without any difficulty. The task helped me in understanding the target content/ lesson.
✓ - I was able to do/perform the task. It was quite challenging, but it still helped me in understanding the target content/lesson.
? – I was not able to do/perform the task. It was extremely difficult. I need additional enrichment activities to be able to do/perform this
task.
Learning Task LP Learning Task LP Learning Task LP Learning Task LP

VII. REFERENCES Aduana, N. Entrepreneurship in Philippine Setting for Senior High School.
Reprint, Quezon: Vibal Group Inc., 2016.

Oliver. Peter, Operations Management (Business Success) (Volume 3) 1st Edition. ISBN-13: 978-
1539466437, pp. 90-93

Prepared by: Ma. Cristina Razon Checked by: Flor I. Tomas Erlito B. Orlinga
Dhonabel A. Catelo Andrea D. Sembrano Delsife D. Canta
Mariel J. Canicula Rizamia E. Calipay
Gina A. Verano Joyce E. Advincula