What Is Meant By Merchandise Cost?


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amber Jhon Profile
amber Jhon answered
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
thanked the writer.
Anonymous commented
Thank you.
amber Jhon
amber Jhon commented
You welcome! I hope you will get help from practice problems as well :)
Anonymous commented
Whether expenses like carriage inward, wages etc to be added to opeining inventory to get the cost of merchandise?
Anonymous Profile
Anonymous answered
The vendor will not produce any goods & servises but he do purchase different products from diffrent people and exports same products to different places.

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