Gross Profit Analysis or GP Analysis

Gross profit analysis is the differentiation b/w Cost of Goods that sold and sales value. As the observance of the standard gross profit figure or actual to the budgeted is extremely required, a careful study of surprising changes in gross profit is helpful to a corporation’s management. These variations or changes are the outcome of one or a mixture of the following.
  1. Variations in cost elements, i.e. labor, operating costs, supplies and materials.
  2. Variations in volume sold.
  3. Changes in the sales cost of the goods.
Gross Profit Analysis =  Cost of Goods which sold - sales value