Cost of Sales Method

This method is used by recharge operations that are retail oriented. Since the cost of each product identified for sale is known, the rate (i.e., sales price) is determined by adding a markup to the cost of the item. The markup covers the operating costs (i.e., stock room clerk, twine) associated with selling the item. The markup is added to the cost of the item to determine the sales price. The following is an example for a stock room:

COST OF SALES RATE CALCULATION
ILLUSTRATION

The Stock Room recharge is establishing the following expenditure budget for fiscal year 200x.

Stock Room Recharge Expenditure Budget 200x (Includes only those expenditures allowable for cost recovery.)
		Budget
Personnel Costs	$	10,000
Services		9,000
Supplies		2,500
Travel		2,000
Lease and Rental		3,000
Occupancy and maintenance		2,000
Depreciation		1,500
Prior year fund deficit/<balance> if any		<1,900>
Total costs	$	28,100

Stock Room Recharge Estimated Cost of Goods to be Purchases for Resale in 200x
The stock room estimates that it will purchase the following amount of inventory in 200x.
Chemicals	$	40,000
Glassware		20,000
Estimated Cost of Goods to be Purchased for Resale	$	60,000