If a venture has monthly revenue of 10,000 and expenses of 5,000, what is the monthly gross profit?

If a venture has monthly revenue of 10,000 and expenses of 5,000, what is the monthly gross profit?

• A. 5,000
• B. 10,000
• C. 0
• D. 15,000

Answer: (A)

Gross profit shows how much money remains after covering the direct cost of producing the goods or services sold. It’s calculated by subtracting the cost tied to generating revenue from the revenue itself. Here, monthly revenue is 10,000 and the costs to produce those goods are 5,000. Subtracting gives 5,000, so the gross profit is 5,000. If there were additional operating expenses, they would be subtracted later to get net profit, but for gross profit this is the amount.

Gross profit shows how much money remains after covering the direct cost of producing the goods or services sold. It’s calculated by subtracting the cost tied to generating revenue from the revenue itself. Here, monthly revenue is 10,000 and the costs to produce those goods are 5,000. Subtracting gives 5,000, so the gross profit is 5,000. If there were additional operating expenses, they would be subtracted later to get net profit, but for gross profit this is the amount.