![]() ![]() This includes the cost of raw materials, direct labor, and other costs directly related to production or acquisition.Ĭlosing Inventory: The value of the inventory (goods) remaining at the end of the accounting period.īy subtracting the closing inventory from the sum of opening inventory and purchases or production costs, you can determine the total cost of goods sold during that period. ![]() ![]() Purchases or Production Costs: The cost of acquiring or producing additional inventory during the accounting period. Opening Inventory: The value of the inventory (goods) held at the beginning of the accounting period. However, in general, COGS can be calculated using the following formula:ĬOGS = Opening Inventory + Purchases or Production Costs - Closing Inventory. The calculation of COGS can vary depending on the type of business and the accounting methods used. Gross profit is calculated as revenue minus COGS and represents the amount of money left after deducting the direct costs of producing the goods. It includes the cost of materials, labor, and other direct costs directly associated with the production or acquisition of the goods.ĬOGS is an important financial metric because it is subtracted from the company's revenue to determine its gross profit. Cost of Goods Sold (COGS) is an accounting term that represents the direct costs incurred by a company in producing or acquiring the goods it sells during a specific period. ![]()
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |