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