Mr Calcu | Quickly calculate your cost of goods sold to uncover profit insights and make smarter business decisions.

Use our free COGS calculator to instantly determine your cost of goods sold. Simplify your accounting and boost profitability with confidence.

COGS Calculator Description

What is COGS?

Cost of Goods Sold (COGS) refers to the direct costs associated with producing goods or services sold by a business. It is crucial for calculating:

• Gross profit
• Taxable income
• Operational efficiency

Standard COGS Formula

COGS = Beginning Inventory + Purchases + Direct Labor + Manufacturing Overhead - Ending Inventory

Each component must reflect production-only costs. Exclude administrative, marketing, and distribution expenses.

Inventory Valuation Methods

Different accounting methods influence the COGS result:

• FIFO (First-In, First-Out): Uses oldest inventory first.
• LIFO (Last-In, First-Out): Uses most recent inventory first.
• Weighted Average Cost: Applies an average cost to all units.
• Specific Identification: Tracks unique items individually.

Case Studies

1. Manufacturing Firm

• Beginning Inventory: $25,000
• Purchases: $50,000
• Labor: $20,000
• Overhead: $10,000
• Ending Inventory: $18,000

COGS = 25,000 + 50,000 + 20,000 + 10,000 - 18,000 = $87,000

2. Retail Clothing Store

• Beginning Inventory: $10,000
• Purchases: $30,000
• Ending Inventory: $8,000

COGS = 10,000 + 30,000 - 8,000 = $32,000

Edge Cases to Consider

• Zero Beginning Inventory: Common for startups or new product lines.
• Negative Ending Inventory: Usually a data error and should be corrected.
• Returns & Allowances: Adjust purchases downward to reflect actual spend.
• Obsolete Inventory: Must be written off or excluded from ending inventory.
• Consigned Goods: Should not be included in COGS calculations if not owned.

For more information, refer to Wikipedia or Investopedia.

Start calculating your COGS now and gain clarity on where your money is going—every dollar counts!