Definition
Gross cost of merchandise handled is the cost value of the opening inventory plus purchases and additions at billed cost.
Gross cost of merchandise sold (or cost of goods sold) is the gross cost of merchandise handled less the closing inventory at cost.
Maintained markup is the amount of markup that the retailer wishes to be maintained on a particular category of merchandise after allowing for markdowns or other reductions.
Calculate maintained markup by subtracting gross cost of merchandise sold from net sales.
Maintained markup is then adjusted by cash discounts and workroom costs (alterations, repairs, etc.) to determine gross margin of profit.
Total cost of goods sold is the gross cost of goods sold plus alteration room and workroom net cost – if any – less each discount earned on purchases.
See Also
Gross profit
Retail inventory method of accounting
References
- ^ American Marketing Association, AMA Dictionary.