A company selling goods subtract cost of goods sold from sales to determine gross profit.
Cost of goods sold has to do with the costs of manufacturing a products such as:
In order for a company to know or determine their gross profit for a particular period they will have to deduct their sales from the cost of goods sold.
The formula to determine gross profit is:
Gross profit=Sales -Cost of good sold
Inconclusion a company selling goods subtract cost of goods sold from sales to determine gross profit.
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