Merchandise cost is the cost of merchandise sold. For the calculation of the merchandise cost, few steps are there:

First take the beginning merchandise inventory of the company in dollars or in any specified currency. Now, add up the purchases which are made by the company. The sum of these two things give you the cost of total merchandise available for sale. Now, subtract the ending inventory from the total merchandise available for sale and you will get the merchandise cost of goods sold. It is very important for the valuation of the inventory because it gives the details of the value of beginning, ending and sold inventory.

Practice some examples for more help: Practice problem

First take the beginning merchandise inventory of the company in dollars or in any specified currency. Now, add up the purchases which are made by the company. The sum of these two things give you the cost of total merchandise available for sale. Now, subtract the ending inventory from the total merchandise available for sale and you will get the merchandise cost of goods sold. It is very important for the valuation of the inventory because it gives the details of the value of beginning, ending and sold inventory.

Practice some examples for more help: Practice problem