# Cost of Sales Calculator

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

## 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 (\$)

## 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.

## Cost of Sales Example

How to calculate cost of sales.

1. First, determine the beginning inventory value.

This will be the total value of all inventory at the start of the period being analyzed.

2. Next, determine the cost of raw material.

This will be only the cost of the raw material used to directly make the goods.

3. Next, determine the cost of direct labor.

Again, this is only labor that was directly used to produce the product.

4. Next, determine the manufacturing overhead.

Calculate the total manufacturing overhead used.

5. Next, determine the ending inventory.

Calculate the total value of the inventory at the end of the period being analyzed.

6. Finally, calculate the cost of sales.

Calculate the cost of sales using the information in steps 1-5.