Cost of Goods Sold Calculator

Profit is the key to success for any business. If you're a manufacturer or sell physical goods, you need to have a basic knowledge of Cost of Goods Sold, and how to calculate it, in order to understand if your business is profitable. Here's what you need to know, and how to calculate the cost of goods sold (COGS) in your business.

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How to Use this COGS Calculator?

Using this Cost of Goods Sold calculator is very simple. All you need to do is enter the numbers for your Beginning Inventory, Additional Inventory Costs, and your Ending Inventory. Then, click on Calculate button to determine the Cost of Goods Sold, which will appear below the Calculate button.

What is Cost of Goods Sold?

Cost of Goods Sold is the direct cost of manufacturing the products a business sells. It includes the price of the raw materials or parts, as well as the manual labor costs that went into making the items. It will also include the cost of any machines used to put the products together, electricity to run the machines, and any rent paid on a warehouse where all these process take place. 

Cost of Goods Sold doesn't include indirect costs, such as transportation costs, inventory costs, or the cost of sales.

How to Calculate Cost of Goods Sold?

Follow the steps below to calculate Cost of Goods Sold:

    * Determine your starting inventory, such as stock in your inventory, raw materials, finished items,           etc. 

    * Calculate what was purchased or paid for during the financial period. Make sure you have kept               records and invoices for everything during that period.

    * Find out the Ending Inventory by taking a physical count of products you have left in your                   inventory. If items are broken or out of date, you don’t need to include them.

    * Use the above numbers to determine your COGS.

The Cost of Goods Calculation

The COGS calculation depends on the monetary value of the business's inventory. There are three parts to the equation:

    -Beginning Inventory: The cash value of inventory at the start of the accounting period (Financial         Year, Quarterly, Monthly).

    -Purchases: New stock purchased during that period, like raw materials.

    -Ending Inventory: how much stock is left at the end of the accounting period.

Cost of Goods Sold Formula

Beginning Inventory + Purchases - Ending Inventory = COGS

Accounting methods vary from business to business, so use this cost of goods sold calculator for an accurate calculation.