Gross Profit Analysis Definition and Formula

Gross profit analysis is the difference (minus sign) between Cost of Goods that sold and sales value. Learn More about GP analysis here.

Gross Profit Analysis =  Cost of Goods which sold - sales value
See these important links too regarding GP analysis:
  1. How determine or procedures for finding Gross profit analysis
  2. Reasons for change in GP analysis
  3. Important uses of gross profit analysis
I am sure you will learn all about Gross profit analysis by scrolling and viewing all links.My aim is to write and share all about GP analysis only.

Reasons for change in gross profit

The main reasons for change in gross profit due to these actions:

  • The unit volume of items sold has varied/changed.
  • Sales prices have varied.
  • The buy price of direct materials has changed; it creates change in gross profit.
  • The cost of direct labor has changed.
  • The mix of products sold has changed (which changes the gross profit if different products have different gross margins)
  • The quantity of direct materials required has varied/changed.
These were some basic reasons which change the gross profit. Also See Uses and advantages of Gross profit analysis here