Cost of Goods Sold Calculator

The cost of goods sold calculator calculates the selling cost based on the beginning inventory, purchases during the accounting period, and closing inventory. Calculating the cost of goods sold is essential to know the carrying cost and the storing cost of the inventory.

Cost of Goods Sold (COGS)?

The COGS is a financial metric to know the total business expenses to sell products or goods specifically. It represents the direct costs related to the production or purchase of the goods that a company sells during a specific period.

You can calculate and determine a company’s gross profit, which is a key indicator of profitability. The cogs calculator is easy to use and provides the company with the feasibility to know the potential profit margin in a specific period.

Formula To Calculate COGS:

Enter the cost of inventory, labor, manufacturing, and purchasing overheads in the inventory process and ending inventory.

Cost of goods sold = Beginning Inventory + Purchases – Ending Inventory

Beginning Inventory:

Beginning inventory is the cash value of inventory at the start of the new financial year.

Purchases:

Purchases are the cost of manufacturing and the cost of goods sold during a financial year.

Ending Inventory:

Ending inventory is the cash value of inventory at the end of the previous financial year.

Cost of Goods Sold Example:

Let’s say an SME store ”X” had an opening inventory value of $10,000, and incurred $30,000 in additional inventory purchases during the month. They had a closing inventory value of $12,000. Then calculate COGS for the month for the company ”X”.

Data Given:

Beginning inventory = $10,000

Purchases = $30,000

Closing Inventory = $12,000

COGS =?

Solution:

Cost of goods sold = Beginning inventory + Purchases – Ending inventory

Cost of goods sold = $10,000 + $30,000 – $12,000

Cost of goods sold = $28,000

Calculate the cost of goods sold for the just in time inventory management.

So, the Cost of Goods Sold for the month is $28,000.

Additional Asked Terms:

Is COGS a Credit or Debit?

The Cost of goods sold is an expense account, so it is increased by a debit entry and decreased by a credit entry.

Is COGS a Liability or Expense?

The adjusted cost of goods sold is not an asset (what a business owns), nor is it a liability (what a business owes). It is an expense. Expenses is an account that contains the cost of doing business.