Gross Margin

Gross Margin is Sales – Cost of Goods Sold OR Sales minus Cost of Goods Manufactured.

Let’s say you sold $20,000 worth of shoes. You paid $4,000 for the shoes and $5,000 in income taxes. Your Gross Margin would be $20,000 -$4,000 or $16,000. The gross margin calculation considers only the cost of the product. Other expenses may be essential, but they are not part of the gross margin calculation. If you have a factory and made the shoes instead of buying them, you would deduct the cost to make the shoes, the Cost of Goods Manufactured instead of the Cost of Goods Sold.

https://accounting.uworld.com/cpa-review/lc/accounting-dictionary/term/gross-margin/