To calculate the gross profit, you can use the following formula:
- Gross Profit = Sales – Cost of Goods Sold (COGS)
In this case, the company’s sales amount to $695,000 and the cost of goods sold is $278,000. Plugging these values into the formula gives us:
- Gross Profit = $695,000 – $278,000
Now, let’s do the calculation:
- Gross Profit = $417,000
Thus, the company’s gross profit equals $417,000. This represents the amount of money remaining after the costs of producing the goods sold have been deducted from sales, which is crucial for understanding the profitability of the company.