What is the difference of Purchase cost and cost?

[at30]

When I fill out fields for setting up items, I notice three boxes. One of them is for the price, and I use the purchase cost there, which is what the product costs me. But I'm confused about the part that says "cost." What does that refer to?

[Hanna]

Since you are subscribe to the Advanced Inventory features, there will be another field in your items for the purchase cost.

The difference between Cost and Purchase cost is that:

1. Cost:

- This is the overall cost associated with the item, including production, shipping, and other expenses.

- It helps you understand the total expense incurred in getting the item ready for sale.

 

2. Purchase Cost:

- This is the specific amount you paid to buy the item from the supplier or manufacturer.

- It helps you track how much you spent to acquire the product.

-Purchase cost is used to auto-fill the item's cost every time you will do a purchase order

In short, "Cost" is the total expense, while "Purchase Cost" is the amount you paid when buying the item.

[at30]

I see, but how to calculate the cost?

For example, I got the item from a supplier for $5 each and I got 6 of them, I also paid the shipping fee of $10, and other expense costs $5

Question: How much is the cost of my 6 items?

[Hanna]

To calculate the total cost of your 6 items, you need to consider the cost of the items themselves, any shipping fees, and other associated expenses. Here's how you can calculate it based on the example I gave above:

 

1. Cost of Items:

You bought each item for $5, and you have 6 items.

Cost of items = $5/item * 6 items = $30

 

2. Shipping Fee:

You paid a shipping fee of $10.

 

3. Other Expense Costs:

I mentioned other expense costs of $5.

 

Now, add all these components to find the total cost:

 

Total Cost = Cost of Items + Shipping Fee + Other Expense Costs

Total Cost = $30 + $10 + $5 = $45

 

Therefore, the total cost of your 6 items, including the cost of the items, shipping fee, and other expenses, is $45.

To find the cost of each item, you can divide the total cost by the number of items. In this case, the total cost is $45 for 6 items. Therefore:

Cost per item = Total Cost / Number of Items

Cost per item = $45 / 6 items = $7.50/item

So, the cost of each item is $7.50.