Calculating consignment costs

To determine the overall costs of consigning a product, we consider all the overhead costs involved during the supply of the product. These costs include hard costs which include the salaries and financing. In this case, the production cost is 0.25 dollars per bag. In this case, the company would give the OXFOOD Company the reusable bags on consignment basis. In order to make a profit from the agreement, OXFOOD will have to first determine the expenses that may result from the agreement. For instance, there is the cost of managing the materials which will be ranged to be 0.01 dollars. In order to make the desired profits, the company will therefore sell them at 2 dollar per bag so as to cater for the production costs involved and all the other expenses.  The calculations to determine the profits are done below.

To be able to figure out the cost of selling the product, it is advised to multiply the retail amount by the commission percentage. In this case, the percentage commission gained from the store is almost 50 percent. As a result, the calculation for the profit will be as shown below
             
It is therefore clear that in order to figure out the desired cost of selling the products, divide the expected profit with the percentage commission. In this case, if the desired profit is 0.1 dollars, the calculations will be done as shown below