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4. What is the difference between gross profit and net
profit?
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Answer Posted / r v indiresh
Total sales revenue i.e., Gross Sales less Excise duty (if
any) is the Net Sales.
Net Sales less operating expenses(before interest) is the
Operating Profit before interest.
Operating Profit less Interest is Operating Profit after
interest.
Operating Profit after interest less selling & General
Administration Expenses is the GROSS PROFIT.
Gross Profit plus Non-Operating Income and less
Non-Operating Expenses is Net Profit before tax.
Net Profit less Income Tax is Net Profit after Tax.
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You are required to show the effect of each of the following changes on profit and Break-Even-Volume from the information given below: Sales 50,000 units Rs. 5.00 per unit Variable cost Rs. 3.00 per unit Fixed cost Rs. 70,000 Changes: (i) Price changes by 20%. (ii) Volume decreases to 40,000 units. (iii) Variable cost increases to Rs 3.50 per unit. (iv) Fixed cost decreases by 10%.
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