branch accounts
This query is : Resolved
09 November 2009
what do you mean by?
Gross profit on cost
&
Gross profit on sales
Gross profit on cost
&
Gross profit on sales
shakuntala chhangani
(Expert)
09 November 2009
Dear siva,
when we calculate gross profit as a percentage on cost, it is called gross profit on cost and is calculated as G.P./ COGS * 100. When the calculation is done with reference to selling price, it is called G.P. on sales and is calculated as G.P / sales *100. if you want the answer in fractionthen don't multiply by 100 (eg 1/3 or 1/4). example an item having the cost of Rs. 100 is sold at 20% profit on cost. we know, cost + profit = sales
now, profit on cost = 100*20% RS. 20
therefore 100 + 20 = 120
hence profit on cost is 20% (or 20/100 i.e. 1/5 in fraction)and profit on sales is 16.67% (20/120 i.e.1/6 in fraction)
when we calculate gross profit as a percentage on cost, it is called gross profit on cost and is calculated as G.P./ COGS * 100. When the calculation is done with reference to selling price, it is called G.P. on sales and is calculated as G.P / sales *100. if you want the answer in fractionthen don't multiply by 100 (eg 1/3 or 1/4). example an item having the cost of Rs. 100 is sold at 20% profit on cost. we know, cost + profit = sales
now, profit on cost = 100*20% RS. 20
therefore 100 + 20 = 120
hence profit on cost is 20% (or 20/100 i.e. 1/5 in fraction)and profit on sales is 16.67% (20/120 i.e.1/6 in fraction)
CA Ravi Sisodia
(Expert)
09 November 2009
Assume sales = Rs.100
sisituations :-
1). profit 10% on sales
simple 100*10/100 = Rs. 10
2). profit 10% on cost
cost = sales-profit
Assume cost = y
profit = 10% of y
sales = y+.10y = 1.10y
cost = y = 100/1.10 =9.09
sisituations :-
1). profit 10% on sales
simple 100*10/100 = Rs. 10
2). profit 10% on cost
cost = sales-profit
Assume cost = y
profit = 10% of y
sales = y+.10y = 1.10y
cost = y = 100/1.10 =9.09
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