Gross profit in relation to operational account analysis.

Abstract

The need to define clearly the costs that are used to calculate gross profit for the purpose of operational account analysis is stressed. Gross profit should be measured by the difference between gross revenue and the costs related to one activity only, and to factors used solely in one production process. For a fair comparison of gross profits of different enterprises, each enterprise should be compared over the same unit of time. Therefore by definition only continually varying costs should be included as "variable " costs in the measurement of gross profit, and when there is a change in costs that do not vary continually there will be a new planning situation and a new optimal plan. D. A. E. (Abstract retrieved from CAB Abstracts by CABI’s permission)