How to Calculate Extended Cost

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Extended cost refers to the process of calculating the amount that was paid for more than one unit of a product purchased at the same price. This is a basic accounting procedure used in determining total costs for items that are sold at retail prices and almost any other thing that is purchased, such as real estate or vehicles. It is the main way of calculating profits for businesses and is also used in reporting business expenses on the federal income tax Schedule C form.

  • Record the cost paid per item. If you had to pay shipping or delivery charges, this amount should be calculated and added to the item cost. For example, if you bought 100 items at $3 apiece and paid $24 in shipping charges, divide the $24 by 100 and add that amount to the $3 cost. This results in an actual cost of $3.24 per item.

  • Calculate the extended cost by multiplying the $3.24 by 100. The extended cost is $324. This calculation must be done for every product purchased in order to determine a retail price that will result in a profit.

  • Include any other charges that had to be paid, such as taxes or delivery charges. Divide the amount by the number of pieces. The cost of products ordered by the dozen or gross are calculated in the same manner.

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  • Photo Credit Alistair Berg/Digital Vision/Getty Images
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