To calculate profit, you need to determine the net earnings after accounting for the costs incurred in production. Here’s how you can do it step-by-step:
1. Identify the total revenue: This is the total amount of money generated from selling goods or services before any expenses are deducted. It is sometimes referred to as gross income or sales revenue.
2. Identify the total cost of production: This includes all the costs directly associated with the creation of the goods or services. These costs can include raw materials, labor, manufacturing expenses, etc.
3. Subtract the total cost of production from the total revenue: The result obtained from this subtraction represents the profit. Profit is the amount that remains after all production costs have been subtracted from the total revenue. It signifies the net earnings.
Therefore, the correct way to calculate profit is:
Subtract total cost of production from total revenue.
So, the correct answer is:
Subtract total cost of production from total revenue.
The respective choice number is:
3
