To help you further understand this report we have included an explanation of a few income statement concepts relevant to this case, including sales revenue, gross profit, contribution to overhead, and profit before tax.
First, Sales revenue. Sales revenue is a result of everyday business operations for the sales of good and services. It is generated from sales of goods and services minus the cost associated to sales return or undeliverable goods. “[Sales] revenues can be broken down into gross sales, which is the total sales that the firm achieved in the past accounting period, and net sales revenue, which is the total sales minus the sales returns, discounts, and allowances of the accounting period. Sales revenue is sometimes called net sales, net revenue, or just revenue”(Staff, My Accounting Course). In this case, the sales revenue is $77,236,000.
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“[Gross profit] is the difference between revenue and the cost of making a product or providing a service, before deducting overheads, tax, and interests” (Boundless). In the income statement, Gross profit is obtained from deducting the company’s total revenue to the cost of goods sold. Gross profit is also called gross margin, sales profit, or credit sales. Gross profit is normally called Gross margin in the U.S. In this case, since the sales revenue is $77,236,000 and the COGS is $31,963,480. The gross profit will be $45,272,520.
Third, contribution to overhead. “Contribution to overhead is calculated by subtracting direct expenses from the department's revenues. This calculation assumes that all indirect expenses are considered overhead” (Staff, My Accounting Course). Contribution to overhead exist to help in paying for the overhead of the business. In this case, the marketing expenses and general & administrative are the contributions to overhead. Adding $3,487,316 and $9,545,460, you will get $13,032,776 as the contribution to the