Enter the value of the beginning inventory, total value of purchases, and the ending inventory value into the calculator to determine the cost of goods sold.

Cost of Goods Sold Formula

The following equation is used to calculate the total cost of goods sold.

COGS = B + P – E

  • Where COGS is the cost of goods sold
  • B is the beginning value of inventory
  • P is the total value of purchases
  • E is the ending inventory value

COGS Definition

COGS stands for cost of goods sold and is a measure of the true cost of a sold item.

Cost of Goods Sold Example

How to calculate cost of goods sold

  1. Fist, determine the beginning inventory value

    Calculate the total value of your inventory before any goods are sold.

  2. Next, determine the total value of purchases made

    Calculate the total value of the items sold during the time period being analyzed.

  3. Next, determine the ending inventory value

    Calculate the value of your inventory after items have been sold.

  4. Finally, calculate the COGS

    Calculate the cost of goods sold using the formula above and information from steps 1-3.


What is cost of goods sold?

The cost of goods sold, also known as the COGS, is the monetary value of the cost of the items sold during a specific time period.

Why should you care about COGS?

Analyzing the COGS can allow businesses to make quick decisions on purchasing additional inventory and adjusting prices.

cost of goods sold calculator
cost of goods sold formula