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Cost of Goods Sold (COGS) Calculator

Calculate COGS using the standard inventory formula: Beginning Inventory + Purchases - Ending Inventory.

Cost value of inventory at the start of the period
Cost of new inventory purchased or produced during the period
Cost value of inventory remaining at end of the period

Results

Cost of Goods Sold (COGS)$0

📖What is it?

COGS (Cost of Goods Sold) is the direct cost of producing the goods a company sold during a period. It includes raw materials, direct labor, and manufacturing overhead but excludes indirect costs like SG&A, R&D, and sales commissions. COGS is subtracted from revenue to calculate gross profit.

🎯How to use

Enter the beginning inventory (cost), all purchases or production costs during the period, and the ending inventory (cost). COGS = Beginning Inventory + Purchases - Ending Inventory.

💡Example scenario

Beginning inventory $200k + purchases $800k - ending inventory $150k = COGS $850k. If revenue was $1.5M, gross profit = $650k (43% gross margin).

🏆Pro tip

The inventory valuation method (FIFO, LIFO, weighted average) significantly affects COGS and therefore gross profit. In periods of rising prices, FIFO produces lower COGS and higher reported profit; LIFO produces higher COGS and lower taxes (allowed in the US, not under IFRS). Always check which method a company uses when comparing across firms.