Answers the Question
What was the book value of the products that were sold?
Calculator for Cost of Goods Sold
What Is the Cost of Goods Sold?
Cost of goods sold (COGS) is a method for valuing the investment into the items that were sold to another party.
Why Is it Important?
- As products are sold from inventory, companies need to understand what they were worth. In many cases, similar products have very different book values, because of changes to input costs, manufacturing efficiencies, and financing charges. Unless careful records are kept, it can be difficult to calculate the cost basis of the items that have been purchased by others.
Formula(s) to Calculate Cost of Goods Sold
- COGS = INVENTORY START - INVENTORY END + PURCHASES
- Not being consistent with the method used for valuing inventory management (FIFO, LIFO, etc).