The excess of sales over the cost of goods sold is called gross profit. It represents the amount of money a company makes from selling its products or services after deducting the direct costs associated with producing them, such as materials, labor, and manufacturing overhead.
For example, if a company sells a product for $100 and it costs $70 to produce, then the gross profit would be $30 ($100 - $70). Gross profit is an important measure of a company's financial performance, as it indicates how much money is left over to cover other expenses and generate a profit.
It's important to note that gross profit is different from net profit, which takes into account all expenses, including indirect costs like rent, salaries, and advertising. Net profit is the final amount of money that a company earns after all expenses have been deducted from its revenue.
Net sales, on the other hand, represent the total revenue generated by a company from the sale of its products or services, after deducting any discounts, returns, and allowances. It does not take into account the cost of goods sold and is therefore not the same as gross profit.