Answer:
CORPORATE FINANCE & ACCOUNTING FINANCIAL STATEMENTS
Gross Profit
By ADAM HAYES Reviewed by AMY DRURY Updated Feb 10, 2021
What Is Gross Profit?
Gross profit is the profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. Gross profit will appear on a company's income statement and can be calculated by subtracting the cost of goods sold (COGS) from revenue (sales). These figures can be found on a company's income statement.
Gross profit may also be referred to as sales profit or gross income.
Understanding Gross Profit
Gross profit assesses a company's efficiency at using its labor and supplies in producing goods or services. The metric mostly considers variable costs—that is, costs that fluctuate with the level of output, such as:
materials
direct labor, assuming it is hourly or otherwise dependent on output levels
commissions for sales staff
credit card fees on customer purchases
equipment, perhaps including usage-based depreciation
utilities for the production site
shipping
