Originally Posted by
Pragmatic1
Actually "He" is not misinterpreting anything. 'Gross Profit' is used in finance to measure how effectively management uses labor in the production cycle. This is a labor issue isn't it. The rule changes will impact this effectiveness. However, when you compare a FedEx annual cost of $10 to 15 million to implement the rule changes vs. a $30 billion plus GROSS PROFIT it seems quite small. Something a few cent increase in shipping cost could possibly pay for.
Except that labor cost at FedEx is classified as operating expense and not cost of goods sold. As a result increased labor costs have zero effect on 'Gross Profit'.
A more appropriate comparison of cost would be to total operating expense, or to operating profit. You are causing confusion by using a term which at Fedex differs little from revenue, but sounds alot like net income.