Distribution Center

Nov 7, 2019
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I have company that buys product in bulk, re-packages the product to sell 2 or three items together with the seller's brand/packaging, then sales to the retailer. I have a couple of questions...

1. Is the re-packaging of the product a service to the seller?

I believe it is because the distribution center is repackaging using the seller's brand...this would be a service fee to the seller. I may be wrong, but everyone is fighting me saying it's cost of goods sold for the distribution company.

2. If this is not a service fee to the seller, is it part of the distribution center's cost of goods sold?

3. I'm not quite certain of costs of goods sold associated with a distribution center. Please let me know if I'm incorrect or missing something. The COGS for a distribution center are
- Costs associated with Transportation In and between it's own distribution center/warehouses before sale
- Costs associated with unpacking and loading into distribution center
- Rent, utilities associated with storage space of inventory before sale (ex: Distribution Center = 10,000 sq ft, inventory located in 1,000 sq ft. Only utilities and rent allocated to the 1,000 sq ft can be COGS)
- Wages associated with staff doing the above can be allocated to COGS

Anything having to do with the sale of the product does not belong in COGS.

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