Cost price

Cost price

In retail systems, the cost price represents the specific value that represents unit price purchased. This value is used as a key factor in determining profitability and in some stock market theories it is used in establishing the value of stock holding.

Contents

Forms

Cost prices appear in several forms, such as Actual Cost, Last Cost, Average Cost and Net realizable value.

Cost Price

cost price is also known as c p it is the original price of any item who bought it Cost price is used in establishing profitability in the following ways:

  • Selling price (Excl. Tax) less cost results in the profit in money terms.
  • Profit / selling price (Excl. Tax) when expressesd as a percentage produces (Gross Profit) or GP%
  • Expense / Net Sales yields a percentage which when used as the target margin will produce gross profit.

Actual Cost

Actual Cost or Landed Cost In this calculation all expenses in acquiring an item are added to the cost of items to establish what the goods actually cost. Additions usually include freight, duty etc..

Cost

This is the actual value of the item when last purchased. Normally expressed in units.

Average Cost

When new stock is combined with old stock, the new price often overstates the value of stock holding. The better method is to combine the total value of investment in stock, old and new and divide by the total number of units to calculate the average cost. This is a very accurate method of establishing stock holding.

Moving Average Cost

Moving average cost. (MAC) A slight permutation on the above, with the average being calculated from the previous average and new price.

Net Realizable Value

Normally indicates the average value of an item in the marketplace. Often this cost is interchangeable with replacement cost.


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Look at other dictionaries:

  • cost price — noun The price the dealer pays for goods bought • • • Main Entry: ↑cost * * * cost price UK US noun [countable/uncountable] [singular cost price plural cost prices …   Useful english dictionary

  • cost price — ➔ price1 * * * cost price UK US noun [C or U] COMMERCE ► the amount of money that is spent to produce goods or services before any profit is added for the manufacturer or producer, or the price that a store, etc. pays for goods that it is going… …   Financial and business terms

  • cost price — cost prices N VAR: oft at N If something is sold at cost price, it is sold for the same price as it cost the seller to buy it. [BRIT] ...a factory shop where you can buy very fashionable shoes at cost price... The shop claims to have sold… …   English dictionary

  • cost price — n [U] the price that someone pays for something that they are going to sell …   Dictionary of contemporary English

  • cost price — cost ,price noun count or uncount the price it costs to produce something, without making any profit …   Usage of the words and phrases in modern English

  • cost price — ► NOUN ▪ the price at which goods are bought by a retailer …   English terms dictionary

  • cost price — UK / US noun [countable/uncountable] Word forms cost price : singular cost price plural cost prices the price it costs to produce something, without making any profit …   English dictionary

  • cost price — / kɒst praɪs/ noun a selling price which is the same as the price, either the manufacturing price or the wholesale price, which the seller paid for the item …   Marketing dictionary in english

  • cost price — / kɒst praɪs/ noun a selling price which is the same as the price, either the manufacturing price or the wholesale price, which the seller paid for the item …   Dictionary of banking and finance

  • cost price — noun (U) the price that someone pays for something that they are going to sell; cost 1 (4) especially AmE …   Longman dictionary of contemporary English

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