Cost of Goods Sold Calculator

Calculate your Cost of Goods Sold (COGS) to determine your inventory costs by entering your beginning inventory, purchases, and ending inventory values.

Input Parameters

Calculation Results

Calculation Formula

COGS = Beginning Inventory + Purchases - Ending Inventory

Where:
Beginning Inventory: The value of inventory at the start of the period
Purchases: The cost of inventory purchased during the period
Ending Inventory: The value of inventory at the end of the period

Cost of Goods Sold Calculator Usage Guide

Learn how to use the Cost of Goods Sold Calculator and its working principles

What is Cost of Goods Sold (COGS)?

The Cost of Goods Sold (COGS) represents the direct costs attributable to the production or purchase of the goods sold by a company. This amount appears on a company's income statement and directly reduces revenue to calculate gross profit.

How to Use This Calculator

  1. Enter your Beginning Inventory - This is the value of inventory at the start of your accounting period.
  2. Enter your Purchases - This includes the cost of all inventory purchased during the period.
  3. Enter your Ending Inventory - This is the value of inventory remaining at the end of your accounting period.
  4. Click the Calculate button to determine your COGS.

Example Calculation

Suppose a company had:

  • Beginning Inventory: $50,000
  • Purchases: $120,000
  • Ending Inventory: $30,000

Then their COGS would be calculated as:

COGS = $50,000 + $120,000 - $30,000 = $140,000

Why is COGS Important?

COGS is crucial for several reasons:

  • It determines your company's gross profit
  • It's used to calculate your company's inventory turnover ratio
  • It affects your company's tax liability
  • It helps in pricing your products appropriately

Formula

COGS = Beginning Inventory + Purchases - Ending Inventory