Understanding Profit Calculations on the Service Invoice Report

The Service Invoice Report provides a detailed breakdown of service-related transactions, including profits from various components. This guide explains the formulas used to calculate profits on the report, ensuring accuracy and clarity when reviewing financial data.

Service Invoice Report: Profit Calculation Explanation

The profit on the Service Invoice Report is derived using the following formula:

Labour + Discount (adjusted for sign) + Subcontract Profit + Parts Profit + Oil Sales Profit + Non-Labour

Key Points to Understand

1. Labour:

   • Includes all labour charges associated with the service.

2. Discount Column:

   • The Discount column applies only to menu-priced jobs.
   • Adjustments to the profit calculation are based on the sign of the discount:
     • A negative discount increases the profit (+).
     • A positive discount decreases the profit (-).

3. Subcontract Profit:

   • Represents the profit earned from subcontracted jobs related to the service.

4. Parts Profit:

   • Includes profit margins on parts used for the service.

5. Oil Sales Profit:

   • Accounts for profits from oil sales included in the job.

6. Non-Labour:

   • Covers any additional charges or profits not categorised under the other headings.

Example Calculation

If a service includes the following data:

• Labour: £100
• Discount: -£20 (negative discount increases profit)
• Subcontract Profit: £30
• Parts Profit: £50
• Oil Sales Profit: £10
• Non-Labour: £5

The profit is calculated as:
£100 + (-£20) + £30 + £50 + £10 + £5 = £175

Scenarios Where This Guide is Useful

• Verifying the profit calculations on the Service Invoice Report.
• Understanding how discounts and other profit sources impact the total profit figure.
• Explaining discrepancies in profit figures by breaking down the formula.