QQuestionAccounting
QuestionAccounting
Which of the is the correct formula for calculating gross profit percentage?
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Answer
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Step 1: Gross Profit Percentage is calculated by dividing the gross profit by the net sales and then multiplying by 100 to get a percentage.
Gross\,Profit\,Percentage = \frac{Gross\,Profit}{Net\,Sales} \times 100
The formula is as follows:
Step 2: Here, gross profit is the revenue left after subtracting the cost of goods sold (COGS) from the total revenue.
Gross\,Profit = Total\,Revenue - COGS
Mathematically, it can be represented as:
Final Answer
Gross\,Profit\,Percentage = \frac{Gross\,Profit}{Net\,Sales} \times 100 where, Gross\,Profit = Total\,Revenue - COGS and Net\,Sales = Total\,Revenue - Discounts - Returns - Allowances
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