What is profit and loss? (Including worked question)

In order to understand profit and loss you first need to understand what makes them.Profit / Loss = Total Revenue - Total CostsOnce again you need to question what makes up Total Revenue and what makes up Total Costs?Total Revenue = No. of product sold x Price of profuctTotal Costs are slightly more tricky... Total Costs = Fixed Costs + Variable CostsFixed costs: Costs that do not vary with the level of output In other words they are something that will always apply to a business' costs e.g. rent.Variable costs: Costs that vary with the level of outputIn other words they are something that can differ from month to month for the business' costs e.g. raw materials.Example Question:Mary owns a business that sells clocks. In September Mary sold 26 clocks at £4.99 each. Mary's rent for her shop is £35 per month, wood cost her £10 and metal cost her £5.In October Mary sold only 19 clocks at the same price of £4.99 each. Mary still rents the same shop, however this month wood cost Mary £12 and metal cost her £7.50.Work out the profit and or loss for each month. Show your working.Solution:September - Total Revenue = No. of products sold x Price of productTR = 26 x £4.99 = £129.74Total Costs = Fixed Costs + Variable CostsTC = £35 + £15 = £50Profit/ Loss = TR - TCProfit/ Loss = £129.74 - £50 = +£79.74Therefore in September Mary made a profit of £79.74October - Total Revenue = No. of products sold x Price of productTR = 10 x £4.99 = £49.90Total Costs = Fixed Costs + Variable CostsTC = £35 + £19.50 = £54.50Profit/ Loss = TR - TCProfit/ Loss = £49.90 - £54.50 = -£4.60Therefore in September Mary made a loss of £4.60