Inventory Cost Calculator

Formula

The formula to calculate the Inventory Cost (IC) is:

\[ IC = BIP - EIV \]

Where:

$ IC $ is the Inventory Cost ($)
$ BIP $ is the beginning inventory purchases ($)
$ EIV $ is the ending inventory value ($)

What is Inventory Cost?

The inventory cost is the total cost associated with the inventory held by a business. It is calculated by subtracting the ending inventory value from the beginning inventory purchases. This calculation helps businesses understand the cost of goods sold and manage their inventory more effectively.

Example Calculation

Let's assume the following values:

Beginning Inventory Purchases (BIP) = $5000
Ending Inventory Value (EIV) = $2000

Using the formula to calculate the Inventory Cost:

\[ IC = 5000 - 2000 = 3000 \]

The Inventory Cost is $3000.