Answer :
The net delivered cost of purchases is calculated by the formula: purchases plus freight in minus purchases returns and allowances minus purchases discounts.
When calculating the net delivered cost of purchases, we start with the initial purchases made by the company. To determine the net cost, we add the freight costs associated with the purchases (freight in). However, we need to subtract any returns and allowances granted by the supplier, as well as any discounts received for prompt payment or other reasons. By deducting these returns, allowances, and discounts from the total purchases and freight in, we arrive at the net delivered cost of purchases. This figure represents the final cost incurred by the company for acquiring inventory or goods for sale after considering these adjustments.
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