Gross profit is the profit that a company earns after deducting all the costs associated with manufacturing the firm’s product from the sales/revenue/turnover.
The formula is: Gross profit = Revenue – cost of goods sold
Cost of goods sold include labour/manpower charges, raw material cost, the factory overheads. However, cost of goods does not include marketing and distribution expenditure.
Gross profit margin is the percentage of gross profits over net revenues.