Work Sheet for Projecting Potential Profit Based Upon Licensor’s Sales of Newly Licensed Products

Work Sheet Computation Variation in Sales
		I	II	III
Sales	$5,000,000
Cost of Sales	2,500,000
Gross profit on sales	2,500,000
Royalties paid to licensor (6%)	300,000
Gross profit on sales after royalties	2,200,000
Additional variable selling expenses (@ 10% of sales)	500,000
Profit from sales of licensed products before additional fixed expenses	1,700,000
Increases in fixed expenses due to substantial increases in sales	200,000
Profit attributable to superimposed sales of Licensed Products:
Amount	$1,500,000
Percentage	30%

NOTE: Data based upon a minimum sales volume of $5,000,000 are set forth as a guide for the work sheet computations; a licensee will utilize his projected sales volume, cost and expense percentages; a licensee should project profit based upon varying sales volumes over a period of years.