Question

Direct costs of producing a product or providing a service is called

	a.	gross profit
	b.	gross profit margin
	c.	net profit
	d.	net profit margin
	e.	cost of goods sold

Answer 1

Answer : e. cost of goods sold

Note:

1. The cost of goods sold is the cost directly attributed to the  producing a product or providing a service. It includes direct material, labor and other costs which are directly associated with the production of the product.

2. The gross profit is the amount which remains after the costs of producing the product are deducted from the revenue from the sale of the product.

3. The gross profit margin is the percentage of the gross profit as compared to the revenue.

4. Net profit margin is the amount which remains after the all the costs are deducted from the revenue from the gross profit.

5. The net profit margin is the percentage of the net profit as compared to the revenue.