What is the difference between value added and profits?
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The biggest difference between profitand added value is that the former is much easier to quantify. Profit equals the cost of sale minus costs of production, transportation, and marketing. ... Value added is more subjective.
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Let’s say a business buys cloth, thread, zippers and buttons for $80, pays $10 for labour to produce a shirt and sells it for $100.
Cost of materials $80
Cost of Labour $10
Sales Price $100
Value Added = $100 -$80 = $20
Profit = $100 - ( $80 + $10 ) = $10
Cost of materials $80
Cost of Labour $10
Sales Price $100
Value Added = $100 -$80 = $20
Profit = $100 - ( $80 + $10 ) = $10
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