This page is for a merchandiser, a costing clerk, or a buyer who needs to see, in one statement, exactly how an order's revenue turns into its profit. At work, a costing sheet lists cost components per piece, but a profit and loss statement, a P&L, sets out the whole order's revenue, cost and profit as one continuous calculation that anyone can check line by line. This lesson mainly teaches the money flow: it turns Order A's own five cost components into a full order P&L, and shows a buyer why an open cost breakdown builds more trust than a single lump-sum price.
Order A earns Northline Apparel's confirmed FOB price of USD 3.20 per piece across 15,000 pieces, USD 48,000 of revenue. Its planned profit of USD 3,900 is not a separate figure floating on its own; it is what is left once every cost component is subtracted from that revenue, line by line. Without this skill, a merchandiser can quote a profit figure without being able to show, to a buyer or to the factory's own owner, exactly which costs it came from.
You need: the five cost components of Order A's price from lesson T16-C04-L01. You do not need any accounting qualification.
By the end of this lesson you can:
Not covered here: spreading a factory's shared overhead across several orders at once (lesson T16-C04-L03), reading a factory's whole monthly result across many orders (lesson T16-C04-L04), and combining an order P&L with a business P&L in one sheet (lesson T16-C04-L05).
| Term | Meaning |
|---|---|
| Revenue | The total money an order earns, the confirmed price multiplied by the quantity. |
| Cost of goods sold | The total direct and overhead cost of making an order: fabric, trims, making and overhead added together. |
| Gross profit | Revenue minus the cost of goods sold, before any further business-level costs are subtracted. |
| Direct cost | A cost that belongs to one specific order alone: its own fabric, trims and making. |
| Open costing | Sharing a cost breakdown with the buyer, line by line, instead of quoting only a single total price. |
| Order P&L | A statement that sets out one order's revenue, cost and profit as one continuous calculation. |
An order profit and loss statement has three main lines: revenue at the top, cost of goods sold subtracted below it, and profit at the bottom as whatever remains. Revenue is the confirmed price multiplied by the order quantity. The cost of goods sold adds together every cost component that belongs to making the order: fabric, trims, making, and the order's own share of overhead. Profit is not entered separately; it is calculated as revenue minus cost of goods sold, so anyone reading the statement can check it themselves by adding the cost lines and subtracting the total from revenue. Because every line is shown, an order P&L can be checked by anyone who can add and subtract; it never depends on trusting a single reported figure with no working behind it.
A merchandiser or a buyer meets several different shapes of the same order P&L across a normal season, and learning to recognise each one prevents a single number from being mistaken for the whole picture.
| What can differ | The shapes you will meet | Why it matters |
|---|---|---|
| Export order shared with the buyer | Northline Apparel asks Delta Garments for Order A's own open cost breakdown before confirming a repeat order. | An open, line-by-line P&L lets the buyer see exactly where its price goes, which builds trust for future negotiation. |
| Domestic order kept internal | Delta Garments builds the same kind of P&L for a Cedar & Co. domestic order, but keeps it for its own costing records rather than sharing it with the buyer. | Even when a P&L stays internal, the same structure, revenue minus cost of goods sold, lets a factory compare orders fairly against each other. |
| An order with unusually high overhead | An order using more machine time per piece than Order A carries a higher overhead component in its cost of goods sold. | A P&L that separates cost lines shows exactly which component is driving a lower profit, instead of leaving the reason hidden inside one total cost figure. |
| Make to Order versus Make to Stock | Order A's P&L is built against Northline Apparel's own confirmed quantity and price; a Make to Stock order's P&L is first built against a forecast quantity and price, then corrected once real sales are known. | A forecast-based P&L can still change materially after the fact, in a way a confirmed Make to Order P&L cannot. |
Sara wants to place a repeat order for the same T-shirt at the same FOB price, USD 3.20 per piece. Before confirming, she asks Mona, the merchandiser at Delta Garments, to show the full cost breakdown behind that price, not just the total. Mona builds Order A's own P&L statement, line by line, so Sara can see exactly how the USD 3.20 splits into fabric, trims, making, overhead and profit, and how that adds up to the order's total revenue, cost and profit.
A common mistake is telling a buyer, an owner, or a colleague an order's profit as a single figure, with no cost breakdown behind it. A number with no supporting lines cannot be checked, and it gives a buyer no reason to trust the price behind it, since there is nothing for them to verify. Sharing the full breakdown, revenue and every cost line down to the profit, costs a merchandiser nothing extra to prepare once the costing sheet already exists, and it is what a buyer such as Sara actually needs to see before trusting a repeat order at the same price. What this costs a factory that gets it wrong is real: a buyer who is refused an open cost breakdown often assumes the price is padded, and may push harder for a discount than an open, verifiable P&L would have required. The same mistake also hurts a factory internally: an owner who is only ever told a single profit figure for each order, never the cost lines behind it, cannot tell which orders are genuinely strong and which are only surviving on an optimistic estimate.
An order's profit and loss statement lists three things: how much money the order earns, how much it costs to make, and what is left over. The money it earns is the price multiplied by the quantity. The cost to make it adds together fabric, trims, making and the order's own share of the factory's running costs. What is left over, after subtracting the cost from the money earned, is the profit. Writing all of this out, line by line, lets anyone check the profit figure themselves, instead of trusting a single number with nothing behind it. A buyer who can see every line is far more likely to trust the price than a buyer who is only shown a total.
Sara, Northline Apparel's buyer, wants to place a repeat order for the same T-shirt design, same quantity, same FOB price of USD 3.20. Before confirming, she emails Mona asking for the full breakdown behind that price, not just the total, since Northline Apparel's own head office now requires an open cost breakdown before any repeat order over 10,000 pieces is approved.
Here is the email Sara actually sent:
Can Mona answer Sara's request using the same figures Delta Garments already has on its own costing sheet, or does she need to renegotiate the price first? Decide before opening the answer.
She can answer it directly, with no renegotiation. Two facts decide this.
First, Order A's cost breakdown already exists. The costing sheet already fixes fabric at 1.15, trims at 0.20, making at 1.10, overhead at 0.49 and profit at 0.26 per piece; multiplying each by 15,000 pieces gives the full order P&L Sara is asking for, USD 48,000 revenue, USD 44,100 cost of goods sold, USD 3,900 profit.
Second, opening the breakdown does not change the price. Sharing the cost lines behind USD 3.20 does not require Delta Garments to renegotiate anything; the price stays the same, only the level of detail shown to the buyer changes.
Mona should send Sara the same figures already on the costing sheet, arranged as a P&L. Refusing the request, or asking for time to "put together new numbers," would only suggest to Sara that the existing price cannot be justified, which risks the repeat order being delayed or renegotiated for no real reason.
Using Order A's own fixed figures, if Sara's head office rejects the repeat order over the missing breakdown and instead re-tenders it, a common outcome in the trade is a buyer asking for a small price concession, often around 2 to 3%, before confirming with a new supplier:
Refusing to share an already-available cost breakdown risks a renegotiation that removes over a third of the order's planned profit, USD 1,440 of the USD 3,900, for a document that costs Mona nothing extra to prepare, since every figure already exists on the costing sheet.
Open the course workbook's "Order P&L" sheet. It lists revenue and each cost component as separate rows, multiplies each per-piece figure by the order quantity with a live formula, and calculates the cost of goods sold and the final profit automatically. Enter the confirmed price, the order quantity, and each per-piece cost component; the sheet builds the full statement without any figure being typed in twice.
[Download the Order and business P&L sheet](../../templates/T16-C04-order-and-business-pl-sheet.xlsx)
1. What are the three main lines of an order P&L statement?
2. Order A's revenue is USD 48,000 and its cost of goods sold is USD 44,100. What is its profit, and how is it calculated?
3. A different export order earns USD 60,000 revenue with a cost of goods sold of USD 55,200. What is its profit?
| EN | AR | FR | TR | Meaning |
|---|---|---|---|---|
| Revenue | الإيراد | Chiffre d'affaires | Gelir | The total money an order earns, the confirmed price multiplied by the quantity. |
| Cost of goods sold | تكلفة البضاعة المباعة | Coût des marchandises vendues | Satılan malın maliyeti | The total direct and overhead cost of making an order: fabric, trims, making and overhead added together. |
| Gross profit | الربح الإجمالي | Marge brute | Brüt kâr | Revenue minus the cost of goods sold, before any further business-level costs are subtracted. |
| Direct cost | التكلفة المباشرة | Coût direct | Doğrudan maliyet | A cost that belongs to one specific order alone: its own fabric, trims and making. |
| Open costing | التكلفة المفتوحة | Calcul de coût ouvert | Açık maliyetlendirme | Sharing a cost breakdown with the buyer, line by line, instead of quoting only a single total price. |
| Order P&L | بيان أرباح وخسائر الطلبية | Compte de résultat de la commande | Sipariş kâr-zarar tablosu | A statement that sets out one order's revenue, cost and profit as one continuous calculation. |
You now know how to build one order's own P&L statement. The next lesson shows how a factory running several orders at once spreads its shared overhead across each of them. Back to the course map