COGS Calculator
Know your true costs. Calculate the Cost of Goods Sold to understand your business profitability.
Value of stock at start of period.
Cost of new stock added.
Value of unsold stock at end of period.
Cost of Goods Sold (COGS)
$4,000
Total Goods Available
$7,000
Why calculate COGS?
High COGS means lower profit margins. Tracking this helps you price products correctly and identify supplier issues.
What is COGS (Cost of Goods Sold)?
Cost of Goods Sold (COGS) refers to the direct costs of producing the goods sold by a company. This amount includes the cost of the materials and labor directly used to create the good. It excludes indirect expenses, such as distribution costs and sales force costs.
How to Calculate COGS
The basic COGS formula is:
Beginning Inventory + Purchases during the period - Ending Inventory = COGS
Accurately calculating COGS is essential for determining your gross profit and gross margin, which are key indicators of your business's financial health.
Why COGS Matters for Your Business
- Tax Deductions: COGS is an expense that can be deducted from total revenue to calculate taxable income.
- Profitability Analysis: Understand which products are the most profitable after direct costs.
- Inventory Management: Track how efficiently you are moving stock through your business.
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