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
How to calculate cost of goods sold
- Fist, determine the beginning inventory value
Calculate the total value of your inventory before any goods are sold.
- Next, determine the total value of purchases made
Calculate the total value of the items sold during the time period being analyzed.
- Next, determine the ending inventory value
Calculate the value of your inventory after items have been sold.
- Finally, calculate the COGS
Calculate the cost of goods sold using the formula above and information from steps 1-3.
The cost of goods sold, also known as the COGS, is the monetary value of the the cost of the items sold during a specific time period.
Analyzing the COGS can allow businesses to make quick decisions on purchasing additional inventory and adjusting prices.
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