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What is the formula of cost of goods sold?

Asked 3 years ago

Hi, I want to calculate COGS but I don't know how. Can someone please explain the formula to me, and give me an example?

Kobe Baker

Thursday, November 11, 2021

This is the formula to calculate the cost of goods sold: (opening inventory + purchases - closing inventory)

Here's an example of calculating the COGS. A company's previous inventory is $2000 while its purchases were $30,000 and its closing inventory is $5000. What are the COGS?

(2000+30000-5000)= $27,000

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