Murabaha sale price is composed of the original cost of goods plus an agreed profit markup. It is similar to the "Historical Cost". The acquisition cost of the merchandise includes not only its purchase price but also the cost of getting it, meaning, customs duties and other taxes on purchases, transport and loading charges, insurance. In theory, the original cost of Murabaha goods must include their direct cost, which includes: Direct manufacturing costs, meaning any added value of the merchandis, which might increase its cost. It is worth noting that the Islamic banks do not currently deal with such costs, because they most probably sell the goods to their clients without any changes. Direct marketing costs, such as transportation, shipping, advertisement, packing costs and salesmen commission for such goods. Direct administration costs, like tax and customs duties for merchandise, telephone and fax costs directly related to the transaction, the registration costs for such merchandise (if it is a car, a flat, house or building) and the documentary credit cost related to the transaction. It has also been generally agreed that the personal expenses, the general administrative overheads and any losses related to the Murabaha goods or to the bank, in general, must not be added to the original cost of the Murabaha goods.
So, the expenses not related to the merchandise, wages, and salaries of workers in the bank or even in the Murabaha department, gas and electricity expenses, depreciation, penalties, compensations or damages the bank paid must not be included in the original cost of Murabaha transactions. Concluding the above statements, the original cost of Murabaha goods equals: the purchase price + the direct marketing costs + the direct administration costs (in the case of selling the goods without manufacturing) or The purchase price + the direct manufacturing costs + the direct administration costs + direct marketing costs (in the case of manufacturing).
Please type your essay title, choose your document type, enter your email and we send you essay samples