This document shows a simplified income statement for a company with $50 million in revenue and $15 million in gross profit. It then lists potential cost savings from reducing direct and indirect labor costs by 5% through automation and process improvements, general and administrative costs by 3.5% by automating employee benefits, and travel and expenses by 2% through better compliance and negotiation. The total estimated cost savings are over $3.8 million, increasing net income by over $230,000.

1. ATTACKING A SIMPLIFIED INCOME STATEMENT
Revenue 50,000,000
Cost of Goods Sold 35,000,000
Raw Materials 30,000,000
Direct Labor 5,000,000
Gross Profit 15,000,000
Total Sales Expense 5,000,000
General & Administrative 6,500,000
Indirect Salaries & Wages 2,000,000
Employee Benefits & Payroll Taxes 500,000
Rent, Utilities & Insurance 1,500,000
T&E 2,000,000
Supplies 500,000
Total Operating Expense 11,500,000
Income Before Tax 3,500,000
Tax on Income 875,000
Net Income 2,625,000
Imagine a 5% reduction of direct & indirect
labor costs through automation, overtime
Controls, & PTO management.
$4,750,000
(5%)
Imagine a 3.5% reduction of G&A through
an automation of employee benefits.
(3.5%) $482,500
Imagine a 2% reduction in Travel & Expenses
through improved compliance with your T&E
policies and tools for vendor negotiations.
$1,960,000
(2%)
$3,807,500
$2,855,625
$230,625 -- increase to net incomeADP
can have a positive impact
On almost every line of the
Income statement!
$951,875