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What Is The Formula For Food Gross Profit?

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Danielle Joynson Profile
  • Formula
The formula for gross profit can apply to any type of product whether it is food or computers. To work it out you need to calculate the generated revenues and take away the cost of the goods that have been sold. For example, if a restaurant chain sold $5 million worth of their food across a state and it cost $2 million to produce, then the gross profit would be $3 million.

  • What is the Revenue?
You would have probably heard this term a lot in business and the trade of goods but you may not understand what it means. The revenue from a business is a term used to identify the income received from goods or services that have been sold.

  • What is the Cost of Goods?
It is important that the cost of goods is calculated. This means that whatever product or service is being sold, there must have been money put in to create it. This particular cost includes an array of things including labor costs, the cost of materials or ingredients and the factories or plants used to produce it.

This is a very important aspect of business because when the cost is calculated, the records will indicate where most of the money is going. This means that employers can check and see if they are spending too much money on certain resources or materials, which they could possible find cheaper.

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