How to Calculate Inventory Cost: A Practical Guide for Businesses

To calculate inventory cost, include the purchase price and eligible costs directly attributable to bringing goods to their current location and condition, such as qualifying freight and handling. Then determine the cost of units sold and remaining stock using an accepted method, such as weighted average or FIFO.

For example, purchasing 100 units at 10 each gives a total purchase cost of 1,000 before eligible additional costs. Try Cash Cloud for free to explore inventory management tools.