What are the widespread costs?
The extended price is the type of accounting process that involves multiplying unit costs for the item with the total number of units purchased with one order. Most of the calculations of this type also include any additional fees associated with the order and reaching the average cost per unit. This is very useful in terms of understanding the total costs paid for each unit, especially if the aim is to sell the client base.
One of the simplest ways to understand the process of extended costs is to consider the local grocery store that buys from the farmer. Grocer decides to buy a total of 100 baking potatoes from a farmer at a sales price of $ 0.50 for potatoes. If the farmer does not charge any type handling or delivery fees for the order, it means that the extended order costs are $ 50. If the farmer charged for the delivery of potatoes a flat fee of $ 5, it means that the prolonged NáklaDY to order i55 $. As a result, the grocery store has an investment of $ 0.55 in each potato and can set the retail price to cover the costs and allow the generation of a certain profit from each potato sold.
Calculation of extended costs is important in determining retail prices for any type of goods or services. Since the process takes into account both the unit price paid for each item, as well as the auxiliary sales expenses, the company is able to determine how much each unit must be sold to break. From there, the company can assess current market conditions and determine the selling price that probably attracts favorable attention from consumers and allows to sell all items in stock for at least some profit.
Although it is important for generating income, the use of the same basic formula is also useful in terms of projection projectionthe costs and profits for the upcoming tax period. This makes it easier for the Company to plan a certain amount of taxes to the relevant agencies in each accounting period, which is an approach that helps prevent taxes and possible imposition of fines or sanctions when filing an annual return. Usually, many companies regularly evaluate extended costs during the business year, while taxing and sales prices, when and how they dictate circumstances.