How do I determine the gross profit from sales for the period?
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Gross profit is the amount of money the business earned in sales, minus the cost of producing the product. The costs of making the product might be: the materials needed to construct the product; overhead costs like electricity, phones, water, gas or other utilities; employees' salaries; advertising costs; taxes; insurance; and any other expenses the company needs to pay in order to stay in business. These expenses are subtracted from the gross sales amount in order to find what your gross profit is. In a nutshell, gross profit is sales minus the cost of producing the product.
gross profit = sales-cost of sales
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