Retailing is one of the important stages in the business industry. Retailers should have the knowledge to analyze and calculate costs, expenses, and retail. Just like other business entities, retailer’s main goal is to maximize profits. There are various importance of a retailer being able to analyze and calculate the cost, expenses, and retail. One of the main importance to comprehend the break-even analysis. The retailers should ensure that the breakeven analysis of the business can cover the expenses and costs. Therefore, calculation of costs and expenses guide the retailers on the pricing of the products or services (Varley 36). The price that is set is based on the calculated costs and expenses. Also, retailers being able to calculate costs and expenses is in a position to forecast startup costs and get information on the sales revenue. The calculation of costs and expenses guide the retailers on the items that should be stocked. For example, the retailers can understand which items should never be out of stock.
The cost of goods sold is a crucial cost that is attributed to the production of items sold in the company. It is important to have an accurate total cost of goods sold. Accuracy is important to tax filling and financial statement. The cost of goods sold is the basis of profitability in an organization. This is because the cost of goods sold (COGS) drives profitability Weele 16). Accurate COGS informs of the exact expenses that the company is going to incur every time a product is sold. Hence, it is an essential component in setting the price. Also, calculation of COGS provides more details on tax perspective. In the general perspective, accurate calculation of COGS matters to the business in different ways. The importance includes profitability, pricing, costs, and expenses.
Work Cited
Varley, Rosemary. Retail Product Management: Buying and Merchandising. New York, NY: Routledge, 2005. Print.Weele, A J. Purchasing & Supply Chain Management: Analysis, Strategy, Planning, and Practice. London: Thomson Learning, 2006. Print.
