Calculating COGS (1 Viewer)

[aussiechica]

Hi! My text has gross profit = revenue - COGS (cost of goods sold). But then it doesnt tell us how to calculate COGS! Is there a formula? Can anyone tell me? (I havent got last years text anymore, it was prolly in there- stupid me)


Thankyou!

 

[truly-in-bliss]

cogs = (opening inventory + purchases) - closing inventory

 

[aussiechica]

Thanks very much

 

[truly-in-bliss]

nw.

 

[FLR-IT]

by the way wat exactly are "cost of goods sold" ?? literally

 

[aussiechica]

Well, its kinda hard to understand, but heres a def I found. Hope its helpful!

An expense that reflects the cost of the product or good that generates revenue for a company. Sometimes referred to as "Cost of Sales."



ie. If a $10 widget cost $6 to make then your COGS is $6

 

[-=«MÄLÅÇhïtÊ»=-]

COGS reflects the "cost" of inventory you sold. By "cost" i mean the price you bought it for.

COGS also includes the costs you incurred in transforming the good and the cost of freight inwards.

 

[hipsta_jess]

yep, what the others said. its basically how much it costs the shop to buy it (as well as staff wages to sell it, insurance, etc).

eg, a shirt is sold to you for $50. when everything is all worked out per garment, the cost to the shop is $30. therfore, COGS=$30 (and the shop makes $20)

 

[truly-in-bliss]

usualli fi u look at the formula it just gives u a definition....



hey malachite...empty ur inbox..

 

[FLR-IT]

the formula doesnt tell me much

thx for help.

 

[truly-in-bliss]

cogs = open + purchases - closing


add how much stock u arleady havve..... then add how much more stock u purchased durign the period... then take awya how much stock is left at the end of the period..then u get how much u sold ... hence cost of goods sold

 

[FLR-IT]

i really hate the COGs it is the only thing in business studies i dont understand

 

[FLR-IT]

lets say

$10 of stock + $20 of pruchases - $30 closing stock

COGs = 0 < wtf does that mean? i sold zero dollars of stock??


thats according to ur word eqn BLISS

 

[truly-in-bliss]

it means u broke even. use ur common sense... if its postive, u made profit, if it is negative it means u lost money.

 

[-=«MÄLÅÇhïtÊ»=-]

truly bliss, nah it doesnt mean that . This is only COGS, which deals with only the expense side of things. Not profit.

FLR-IT, you're right. Coz think about it. Initially you have $10 worth of inventory. You bough another $20, so now you have total inventory of $30. You end the period with $30, then that means you havent sold anything.

 

[veg]

haha financial planning + m'ment is GAY GAY GAY!

 

[truly-in-bliss]

Originally posted by -=MLhtʻ=-
truly bliss, nah it doesnt mean that . This is only COGS, which deals with only the expense side of things. Not profit.

FLR-IT, you're right. Coz think about it. Initially you have $10 worth of inventory. You bough another $20, so now you have total inventory of $30. You end the period with $30, then that means you havent sold anything.

yeha sorry, cogs doesnt have anythign to do with profit. my bad. hahah

but the formula does make sense..i mean if cogs = 0..then simply u didnt sell anything...

hey veg!

 

[FLR-IT]

Originally posted by -=MLhtʻ=-

Initially you have $10 worth of inventory. You bough another $20, so now you have total inventory of $30. You end the period with $30, then that means you havent sold anything.

muahah at last, finally get it

thx for enlightening me

 

[yaya]

truly-in-bliss
i dont agree with u
COGS it simply workin out da expense as ppl said before, its not workin out break even make it profit or loss.
it simply tell s how much u sold if follow
-=MLhtʻ=- method.
COGS=0 for my assumption as i read others says it just mean u sold $o in goods value.
plz correct me if im wrong

 

[symo]

COGS =

open stock
+ purchases
+ cartage in
- close stock