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The Gross Margin
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Definition: The Gross margin is defined as the amount that can be calculated by the difference between the enterprise gross value of the product (Gross income) and the directly allocated variable costs.
Example:
A financial budget for cotton can be calculated if the following is known:
The field size of the crop (cotton), the estimated yield and the crop value per ton or per kg. If one assumes that you would get R3.10 per kg seed cotton, and all input costs add up to a total of R5.561, then the Gross income would be R9300 @ 300kg per ha, (calculated at the above price of R3.10 per kg) and the Gross margin would be the difference between the Gross income and the input costs.
In this case an amount of R3 739.00