Gross Profit

A company’s gross profit is its financial gain after deducting the costs of manufacturing and distributing its goods or services. These expenses are called the cost of goods sold. The amount of money actually earned is referred to as the company’s gross profit, which is the revenue of the business after deducting the costs incurred to return that revenue.

Gross Profit = Revenues – COGS

The general gross profit definition deducts only variable costs. These are any costs that raise or lower the level of output production. Insurance and rent are not included in gross profit because they are not directly related to output.

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