Question

Waymon Co. has net sales of $100,000, cost of goods sold of $70,000, and operating expenses of $18,000. What is its gross profit?

Answer 1

Gross profits is defined as the total profit generated minus the costs of goods sold, that is, gross profit = sales - costs of goods sold.
From the question given, 
Net sale = $ 100,000
Costs of goods sold = $ 70,000
Gross profit = $100,000 - $70,000 = $30,000.
Thus, the gross profit is $30,000.
Operating expenses is not directly involved in the production process that is why it is not used in the calculation of gross profit. But the operating cost will be involved in the calculation if we are asked to calculate the NET PROFIT.