Who this applies to#
- Use gross margin when comparing sales with the cost of goods sold for those sales
What Gross margin requires#
- Record product cost before relying on gross profit or margin reporting
What this does not require#
- Gross margin does not include every operating expense or equal net profit margin
Common mistakes#
- Calling unit margin gross margin without defining the scope
- Mixing gross profit dollars with gross margin percentage
Gross margin checklist#
- Confirm net sales
- Confirm cost of goods sold
- Calculate gross profit
- Divide by net sales