What is gross profit? a. the money left over after the cost of making a product or providing a service b. the cost of labor to produce a product c. the difference between a product's price and the revenue of the company d. a negative net profit, so the company experiences a loss

The correct answer is A

Explanation:

Gross profit is calculated by subtracting the Cost of production (in the case of manufacturing concerns) or Cost of Service provided (in the case of services) from the revenue.

Gross Profit = Total Sales - Cost of Sales

Lets say Company A manufactures and sells shoes. Over a year, Company A recorded sales of $100,000. The cost of manufacturing over the same period was $80,000. For the period, Company A's Gross Profit would be $20,000 i.e. $100,000 - $80,000.

Gross profit varies from Operating profit or net profit in that it does not include indirect overheads or operating costs such as rent.

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