Sales Cost Example

It can be defined as cost of sale to the initial investment that is made when acquiring a product either for manufacture or resale and is the one that is deducted from the total cost to separate the final profit from the total cost.

It is not difficult to separate this cost, but in very high amounts it takes a lot of time and attention to separate the cost of sale from the rest of the charges and added costs.

That is why the cost of sale is separated from the cost of production, advertising, rental of services and others that could be added to the cost of sale.

Cost of sale example:

The engineer Fausto Gonzales Estévez, is an importer, and among his imports he imports sherry brandy and to get his net profits, intends to separate the cost of selling the initial product from the profit and alternate expenses such as advertisements, services, commissions and taxes among others.

Due to the large amount and the high number of merchandise, Eng. Fausto, hired an accountant, who will separate the cost of sale from the rest of the amounts awarded to that specific merchandise.

The accountant separated all the processes and framed the real cost of all the merchandise, leaving the initial cost separate from the rest of the production costs, import customs costs, transport and taxes governmental.

The cost of products sold would be separated as follows:

• Cost of each bottle US $ 100
• Final sale of the product US $ 200
• Direct profit: US $ 100
• The total cost of sale is US $ 100 and must be settled as follows:
• Sales: US $ 200
• Cost of sales: US $ 100
• Gross profit: US $ 100

The total cost of 100 pieces would be 100,000.00 Dollars US $ 100 each bottle.

• Selling only 1 you get US $ 200

And for the same reason, the total cost of sales would be 200,000.00 Dollars.

• Cost of sale: US $ 100
• Gross profit: US $ 100

Remaining in the general balance that each bottle is US $ 100.