Enter the beginning inventory, raw material cost, cost of direct labor, overhead manufacturing cost, and ending inventory to determine the cost of sales.

- Cost Function Calculator
- Fixed Cost Calculator
- Cost of Goods Manufactured Calculator (COGM)
- Cost of Goods Sold Calculator

## Cost of Sales Formula

The following formula is used to calculate the cost of sales.

COS = BI + R + DL + OM – EI

- Where COS is the cost of sales ($)
- BI is the value of the beginning inventory ($)
- R is the value of the raw material ($)
- DL is the cost of direct labor ($)
- OM is the overhead manufacturing cost ($)
- EI is the ending inventory value ($)

## Cost of Sales Definition

A cost of sales is defined as the total value of costs involved in the production of a good or service.

## Cost of Sales Example

How to calculate cost of sales.

**First, determine the beginning inventory value.**This will be the total value of all inventory at the start of the period being analyzed.

**Next, determine the cost of raw material.**This will be only the cost of the raw material used to directly make the goods.

**Next, determine the cost of direct labor.**Again, this is only labor that was directly used to produce the product.

**Next, determine the manufacturing overhead.**Calculate the total manufacturing overhead used.

**Next, determine the ending inventory.**Calculate the total value of the inventory at the end of the period being analyzed.

**Finally, calculate the cost of sales.**Calculate the cost of sales using the information in steps 1-5.

## FAQ

**What is cost of sales?**

Cost of sales is a measure of the total costs associated with producing a good or service. This is typically a physical good, but can be associated with software and services as well.

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