Calculating ColorStreet Inventory costs

Forum|Forum|1 year ago
January 13, 2025
1 reply
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When calculating inventory value/and to understand product costs I track my purchases (amount I paid including shipping & tax)/qty purchased. I think that inflates my inventory costs and unit cost because I don't consider my commission. When I order products I get 25% commission. I do include my commission as revenue but do I need to consider the commission in calculating inventory costs?

RobertB4444

You don't if you are entering the commissions as income. There are two ways to do this entry.

You can enter the cost and the commission separately ($100 cost and $25 commission is a net $75 cost).

Or you can take the commission out at the beginning and never enter it as income ($100 cost minus $25 commission is a $75 inventory cost). The two answers are the same.

The only difference comes when valuing your inventory. 100 widgets that you paid $100 for are worth one dollar each. But 100 widgets that you paid $75 for are worth $0.75 each.

Both are correct valuations for your inventory, depending on how you enter them.

@Jcw25Jcw

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