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How To Calculate Gross Profit

The document discusses calculating gross profit for a store. It provides an example of a store selling Pepsi, burgers, and chips. It calculates the purchases and sales for each item based on cost price, retail price, and quantity sold. The total purchases of $5,900 and total sales of $14,500 are used to calculate the gross profit of $8,600 using the equation: Gross Profit = Sales - Purchases. The document also notes there are other expenses to consider for net profit.

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Qais Waqas
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© Attribution Non-Commercial (BY-NC)
Available Formats
Download as TXT, PDF, TXT or read online on Scribd
413 views

How To Calculate Gross Profit

The document discusses calculating gross profit for a store. It provides an example of a store selling Pepsi, burgers, and chips. It calculates the purchases and sales for each item based on cost price, retail price, and quantity sold. The total purchases of $5,900 and total sales of $14,500 are used to calculate the gross profit of $8,600 using the equation: Gross Profit = Sales - Purchases. The document also notes there are other expenses to consider for net profit.

Uploaded by

Qais Waqas
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as TXT, PDF, TXT or read online on Scribd
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5 NOV 2010 OK GUYS THIS IS WHAT I HAVE LEARN FOR CALCULATING GROSS PROFIT.

I KNOW YOU WOULD HAVE GREATER KNOWLEDGE FOR THIS BUT I WANTED TO DOCUMENT IT SO YOU GUYS CAN GIV E YOUR INPUT. TO PUT IT SIMPLY: GROSS PROFIT= SALES - PURCHASES NOW TO CALCULATE PURCHASES(COST): PURCHASES= [COST PRICE(CP) OF ITEM] X [QUANTITY SOLD] TO CALCULATE SALES: SALES= [RETAIL PRICE(RP) OF ITEM] X [QUANTITY SOLD]

ASSUME WE HAVE A STORE THAT SELLS 3 ITEMS NAMELY: PEPSI= COST PRICE= Rs.10, RETAIL PRICE= Rs.20, QUANTITY= 100 (AVERAGE STOCK OF DAY) BURGER= COST PRICE= Rs.50, RETAIL PRICE= Rs.100, QUANTITY= 100 (AVERAGE STOCK OF DAY) CHIPS= COST PRICE= Rs.10, RETAIL PRICE= Rs.50, QUANTITY= 100 (AVERAGE STOCK OF DAY) NOW SUPPOSE WE HAVE TO CALCULATE GROSS PROFIT(GP) OF TODAY IF WE HAVE SOLD: PEPSI= 100, BURGER= 80, CHIPS= 90 SINCE: PURCHASES= [COST PRICE(CP) OF ITEM] X [QUANTITY SOLD] PEPSI= 10 X 100 = 1000 BURGER= 50 X 80 = 4000 CHIPS= 10 X 90 = 900 TOTAL PURCHASES OR COST= 1000 + 4000 + 900 = Rs.5900 ALSO: SALES= [RETAIL PRICE(RP) OF ITEM] X [QUANTITY SOLD] PEPSI= 20 X 100 = 2000 BURGER= 100 X 80 = 8000 CHIPS= 50 X 90 = 4500 TOTAL SALES= 2000 + 8000 + 4500 = Rs.14500 PUTTING THE AMOUNTS IN THE GROSS PROFIT EQUATION

GROSS PROFIT = SALES - PURCHASES GROSS PROFIT = Rs.14500 - Rs.5900 GROSS PROFIT = Rs.8600 THIS IS A VERY SIMPLE N ABSTRACT WAY OF CALCULATING GROSS PROFIT. ACTUALLY THERE ARE OTHER THINGS TO CONSIDER FOR CALCULATING GROSS PROFIT LIKE TRAVELING OR DEL IVERY EXPENSES ETC BUT USMAN WILL BE THE BEST JUDGE ON whether to include it or not. BUT WE SHOULD KEEP IN MIND THAT ALL BUSINESSES ARE MORE CONCERNED ABOUT NET PROF IT FOR EVERY YEAR OR QUARTER ETC WHICH INCLUDE ALL OTHER COSTS LIKE: SALARIES OF EMPLOYEES COMISSION/DISCOUNT ON ITEMS TRAVELING ADVERTISING DELIVERY EXPENSES TELEPHONE/CELL POSTAL RENT OF OFFICE INSURANCE ON GOODS BAD DEBTS (AMOUNT NOT RECEIVED AGAINST SALES) ADMIN EXPENSES UTILITIES DEPRECIATION MISC(ENTERTAINMENT ETC)

TONITE I WILL IMPLEMENT THIS SCENARIO ON IMONGGO N OTHER POS TO CHECK HOW THEY D O IT. TALK TO YOU SOON. SORRY FOR NOT ABLE TO RESPOND TO YOUR SMS, I HAVE BEEN RECEIVI NG VERY LATE/MULTIPLE MSGS EITHER DUE TO MY CELL OR JAZZ WHICH IS VERY EMBARRAS SING TO SAY THE LEAST. I WILL VISIT SADDAR TOMORROW TO RESOLVE THIS STUPID PROBL EM. OK BROS TAKECARE.

Q FOR USMAN FOR WEBSITE WHAT CAN WE EDIT NOW? HOW TO CHANGE TEXT IN PIC[PRICE?] ADD PGS ANY SUGGESTIONS usman says price= $30 UNDECIDED free dload trial pg imp with capcha n email for [or id n pd] TRIAL N PAID VER SHUD BE DLOADED FROM DLOAD PAGE WHERE USER CAN INPUT ITS CREDIT CARD* INFO ETC DETAILS N EMAIL THEN ACTIVATION KEY OR SERIAL WILL BE SHOWN AS W ELL AS EMAILED TO HIM. IT SHUDNOT BE DLOADED FROM ANOTHER SITE

WE SHUD GET EMAIL ALERT WHEN SOMEONE DOWNLOADS IT WITH HIS EMAIL(DIFFERENT EMAIL S FOR TRIAL N PAID VERSIONS)

1st ver for $30 n 2nd ver for $60

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