What Is Gross Profit?
The gross profit is the total sales of the goods minus the total cost of the goods sold.
When calculating the total sales the business must add up all goods sold over the chosen financial time. This total must only be sales generated from sales of its stock and not be from fixed assets for example, a building.
To calculate the costs of goods sold the business adds all costs involved in selling the goods. These are variable costs, which may fluctuate such as; staff wages, cost of buying the stock, store utilities etc.
Fix costs like rent is not included when calculating the cost of goods sold.