Direct labour is traditionally shown as part of COGS. e.g.) Financial Accounting Standards Board (FASB). Greg Crabtree removes DL and shows it as a separate line item to calculate LER on the P&L. e.g.). How efficient is direct labour to generate Gross Margin. Hopefully, this makes sense to you?
Hi Andy, At the very end of the video. You show the gross margin increasing by $550000. I can not figure out how you arrived at the $550000 increase. What is the math? If you could send me info on how you got this? info@smiledog.ca it would be appreciated.
@@michaelrobinson6612 It's linked to the Contribution margin percentage of Gross margin. Contribution margin is 63.64% of Gross margin (= 1 - (1/dLER)). So when increasing Contribution margin by 350,000 with same dLER, the Gross margin must increase by 350,000/63.64% = 550,000. Hope this helps
Really wonderful. I felt like the Scaling Up book was going a little too fast on this topic, so this video filled in the gaps. Thanks!
This was extremely helpful, easy to follow -- thank you!
I got it. Great video
Why is direct labor not a part of COGS?
Direct labour is traditionally shown as part of COGS. e.g.) Financial Accounting Standards Board (FASB). Greg Crabtree removes DL and shows it as a separate line item to calculate LER on the P&L. e.g.). How efficient is direct labour to generate Gross Margin. Hopefully, this makes sense to you?
Thanks for the video.
❤❤❤
Very good!
Hi Andy, At the very end of the video. You show the gross margin increasing by $550000. I can not figure out how you arrived at the $550000 increase. What is the math? If you could send me info on how you got this? info@smiledog.ca it would be appreciated.
I ran into the same problem. What is that calculation to get gross margin from contribution margin at a 2.75 dLER?
@@michaelrobinson6612 It's linked to the Contribution margin percentage of Gross margin. Contribution margin is 63.64% of Gross margin (= 1 - (1/dLER)). So when increasing Contribution margin by 350,000 with same dLER, the Gross margin must increase by 350,000/63.64% = 550,000. Hope this helps