"If the world were perfect,   it wouldn't be." - Yogi Berra Contribution = Rev. - Variable Cost Profit = Contribution - Fixed Cost CF = Contribution ÷ Revenue

The Profit Plan is nothing more than a set of goals for revenue, spending and earnings, but it is a powerful management tool. It is a snapshot of what the company hopes to achieve for the coming year.

It may help to think of the Profit Plan as a quotation for a single job the size of an entire year's volume. It encompasses every cost and detail the company will experience, yet it is summarized on a single sheet of paper.

It is a guide for some of a manufacturing company's most important benchmarks: not just targets for revenue and profit, but target markups for materials versus conversion and benchmarks for recouping fixed expenses in each estimate.