How to Calculate Cost of Goods Sold - Tutorial

How to Calculate COGS - Definition, Formula, Example

Definition:

Cost of goods sold (COGS) denotes the carrying value of goods and raw materials sold to customers during specific period.

Formula:

Cost of goods sold = Beginning inventory + Purchases - Ending inventory

Example :

Beginning inventory of a company was $16000 and the company purchased new inventory for the cost of $5000. Ending inventory of the company was $10000.Calculate the cost of goods sold in a year.

Given,

Beginning inventory = $16000 Purchases = $5000 Ending inventory = $10000

To Find,

Cost of goods sold

Solution:

COGS = Beginning inventory + Purchases - Ending inventory = 16000 + 5000 - 10000 = 21000 - 10000 = $11000

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