Gross profit

Gross profit is a financial metric that represents the revenue a company earns from sales, minus the cost of goods sold (COGS). In other words, it's the profit that a company makes after accounting for the direct costs of producing or acquiring the goods or services it sells. This metric primarily focuses on variable costs, which are expenses that fluctuate with the level of output. Some common examples of variable costs include:

• materials,
• direct labor (assuming it's hourly or output-dependent),
• sales staff commissions,
• credit card fees on customer purchases,
• equipment costs (possibly including usage-based depreciation),
• utilities for the production site, and
• shipping expenses.

Note that fixed costs, such as rent, office equipment, wages of non-sales staff, insurance, bank costs, and advertising, are not included in calculating the COGS figure when determining gross profit. This metric is typically found in the income statement section of a company's annual report.