How do you calculate gross profit?
Total all revenue and subtract income taxes.
Add up all sales made for the period.
Total all revenue and subtract COGS, SG&A, and income taxes.
Add up all revenue and subtract the cost of goods sold.
The correct calculation of gross profit is to add up all revenue and subtract the cost of goods sold (COGS). The formula to calculate gross profit is:
Gross Profit = Revenue - Cost of Goods Sold (COGS)
To calculate gross profit, you need to add up all revenue and subtract the cost of goods sold (COGS). Here's the step-by-step process:
1. Identify the total revenue: Add up all the sales made for the specific period you want to calculate the gross profit for.
2. Determine the cost of goods sold (COGS): Calculate the direct costs associated with producing or purchasing the goods sold during the period. This includes the cost of materials, labor, and any other costs directly related to production.
3. Calculate gross profit: Subtract the COGS from the total revenue. The formula is: Gross Profit = Total Revenue - COGS.
By following these three steps, you can accurately calculate the gross profit for a given period.