Cost of Goods Sold Calculator

Calculate cost of goods sold using inventory and purchases data.

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What is Cost of Goods Sold?

Cost of Goods Sold (COGS) is the direct costs attributable to the production of the goods sold by a company.

COGS is calculated by adding beginning inventory to purchases and subtracting ending inventory. This shows costs of producing sold goods.

COGS is crucial for businesses, impacting gross profit and profitability. Lower COGS indicates higher profitability; higher COGS can signal inefficiencies.

COGS is important for inventory management and financial reporting, helping assess production efficiency, pricing, and inventory levels.

COGS is a key indicator of a company’s operational performance and financial health.

Cost of Goods Sold Formula

Given:Beginning Inventory=BIPurchases=PEnding Inventory=EICalculate:Cost of Goods Sold=COGS=BI+P−EI\begin{gather*}\bold{Given{:}}\newline\begin{aligned}\text{Beginning Inventory} &= \mathrm{BI}\newline\text{Purchases} &= \mathrm{P}\newline\text{Ending Inventory} &= \mathrm{EI}\end{aligned}\newline\bold{Calculate{:}}\newline\text{Cost of Goods Sold} = \mathrm{COGS} \newline = \mathrm{BI} + \mathrm{P} - \mathrm{EI}\end{gather*}

Cost of Goods Sold Calculation Examples

Example 1

A retail store starts the year with a beginning inventory of $10,000. During the year, they purchase additional stock worth $50,000. At the end of the year, their ending inventory is valued at $15,000.

Let's calculate the cost of goods sold for the year:

Given:Beginning Inventory (BI)=$10,000Purchases (P)=$50,000Ending Inventory (EI)=$15,000Calculate:Cost of Goods Sold (COGS)=BI+P−EI=$10,000+$50,000−$15,000=$60,000−$15,000=$45,000\begin{gather*}\bold{Given{:}}\newline\begin{aligned}\text{Beginning Inventory}\space(\mathrm{BI}) &= \mathrm{{\$}10{,}000}\newline\text{Purchases}\space(\mathrm{P}) &= \mathrm{{\$}50{,}000}\newline\text{Ending Inventory}\space(\mathrm{EI}) &= \mathrm{{\$}15{,}000}\end{aligned}\newline\bold{Calculate{:}}\newline\text{Cost of Goods Sold}\space(\mathrm{COGS})\newline\begin{aligned}&= \mathrm{BI} + \mathrm{P} - \mathrm{EI}\newline&= \mathrm{{\$}10{,}000} + \mathrm{{\$}50{,}000} - \mathrm{{\$}15{,}000}\newline&= \mathrm{{\$}60{,}000} - \mathrm{{\$}15{,}000}\newline&= \mathrm{{\$}45{,}000}\end{aligned}\end{gather*}

This indicates that the cost of goods sold for the retail store during the year is $45,000.

Example 2

A manufacturer begins the year with a beginning inventory of $20,000. Throughout the year, they acquire more materials worth $30,000. By the end of the year, their ending inventory is $10,000.

Let's calculate the cost of goods sold for this manufacturer:

Given:Beginning Inventory (BI)=$20,000Purchases (P)=$30,000Ending Inventory (EI)=$10,000Calculate:Cost of Goods Sold (COGS)=BI+P−EI=$20,000+$30,000−$10,000=$50,000−$10,000=$40,000\begin{gather*}\bold{Given{:}}\newline\begin{aligned}\text{Beginning Inventory}\space(\mathrm{BI}) &= \mathrm{{\$}20{,}000}\newline\text{Purchases}\space(\mathrm{P}) &= \mathrm{{\$}30{,}000}\newline\text{Ending Inventory}\space(\mathrm{EI}) &= \mathrm{{\$}10{,}000}\end{aligned}\newline\bold{Calculate{:}}\newline\text{Cost of Goods Sold}\space(\mathrm{COGS})\newline\begin{aligned}&= \mathrm{BI} + \mathrm{P} - \mathrm{EI}\newline&= \mathrm{{\$}20{,}000} + \mathrm{{\$}30{,}000} - \mathrm{{\$}10{,}000}\newline&= \mathrm{{\$}50{,}000} - \mathrm{{\$}10{,}000}\newline&= \mathrm{{\$}40{,}000}\end{aligned}\end{gather*}

This calculation shows that the cost of goods sold for the manufacturer is $40,000.

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