How to Calculate a Monthly Gross Profit

Gross profit measures the amount of revenue remaining after accounting for the costs of producing the goods. The gross profit does not take into consideration the operating costs or any taxes or interest on the income. You can calculate the gross profit on a monthly basis so that you can compare your company's performance with data from the same month in past years or so that you can figure out the progress you are making towards annual gross profit targets.

Instructions

1. Check your financial records to find your total monthly revenues, cost of goods sold, direct labor used to produce those goods and the costs related to producing the goods for the month.

2. Add the costs of goods sold and the direct costs associated with procuring those goods. For example, if you produce coal and it cost you $520,000 in mining costs and $300,000 in labor to procure the coal for the month, add $520,000 plus $300,000 to get $820,000.

3. Subtract the monthly costs from your total monthly revenue to find your monthly gross profit. In this example, if you have $1.2 million in total monthly revenues, subtract $820,000 from $1.2 million to find your monthly gross profit equals $380,000.

References

• Pacific Lutheran University; Income Statement; Gerald M. Myers; 2004
• Alpine Guild Inc.; How to Keep Score in Business - Glossary of Important Terms; Robert Follett