Gross Cost of Merchandise Handled
Gross cost of merchandise handled is a term used in accounting to describe the total cost of merchandise that a business has handled during a given period of time. This cost includes the cost of the merchandise itself, as well as any associated taxes, freight, and other costs incurred. Gross cost of merchandise handled is a key metric that businesses use to determine their profitability and performance.
Calculating Gross Cost of Merchandise Handled
The gross cost of merchandise handled is calculated by adding up the cost of the merchandise, taxes, freight, and other costs associated with the merchandise. This cost can then be compared to the sale price of the merchandise to determine the business’s profit margin.
Examples of Gross Cost of Merchandise Handled
Here are a few examples of gross cost of merchandise handled:
- A business purchases a computer for $500. The cost of the computer includes taxes and shipping, for a total gross cost of $550.
- A business buys a shipment of clothing from a wholesaler for $3,000. This includes taxes, freight, and other associated costs, for a total gross cost of $3,400.
- A business purchases a shipment of books from a publisher for $2,000. This includes taxes, freight, and other associated costs, for a total gross cost of $2,200.
Conclusion
Gross cost of merchandise handled is an important metric for businesses to measure their profitability and performance. By calculating the gross cost of merchandise handled, businesses can compare the cost of the merchandise to its sale price to determine their profit margin.