Gross profit is the profit after deducting costs related to the production and sale of products/services from the business’s revenue source. Gross profit (or gross profit) is calculated by subtracting the cost of goods sold (COGS) from net revenue.
Variable costs that affect gross profit include: Cost of human resources – Costs for production materials and transportation costs – Cost of loss during production – Warehouse import and export costs – Credit card fees when customers purchase products/services with the card – Depreciate equipment over its useful life – Commission fees for sales staff.
The formula for calculating gross profit is as follows: Gross profit = Net revenue – Cost of goods sold