Free Cost of Goods Sold (COGS) Calculator | Accurate Inventory Valuation Tool
Calculate Cost of Goods Sold in three quick steps: enter opening inventory, add period purchases, subtract closing inventory. Example: $20 000 + $35 750 − $18 400 = $37 350. Merchandise costs average 70 % of U.S. retail sales, so precise COGS tracking protects margins (NRF Retail Facts 2023).
Cost of Goods Sold (COGS) Calculator
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How to use the tool
Opening Inventory: type the period-start stock value. Sample inputs: 20 000.00 or 7 200.00.
Purchases: enter the cost of goods bought or produced. Examples: 35 750.00 or 12 880.00.
Closing Inventory: add the period-end stock value, e.g., 18 400.00 or 6 900.00.
Press “Calculate”: the script shows your COGS instantly.
GAAP requires COGS disclosure on every income statement (FASB ASC 330-10).
Retailers average 70 % of sales as COGS (NRF Retail Facts 2023).
IRS Form 1125-A lists allowable COGS categories (IRS 2023).
Inventory must be cost or lower-of-cost-or-market (“You must value your inventory at cost unless permitted…” IRS Pub 538).
FAQ
What costs belong in COGS?
Include direct materials, production labor, and factory overhead tied to items sold (IRS Form 1125-A Instructions 2023).
How does COGS affect gross profit?
Gross Profit = Revenue − COGS. Lower COGS lifts gross margin and signals efficient production (KPMG Cost-Management Guide 2022).
Can COGS be negative?
No. A negative result indicates mis-keyed inventory or purchase data; review inputs immediately (PwC Accounting Manual 2023).
How often should you calculate COGS?
Most firms compute COGS monthly for management reports and annually for tax filings (Deloitte Inventory Survey 2022).
Which inventory methods impact COGS?
FIFO, LIFO, and Weighted-Average change unit cost flow, altering COGS and taxable income (IRS Pub 538 § Inventory Methods).
Does COGS include shipping?
Inbound freight to acquire inventory belongs in COGS; outbound freight is a selling expense (IRS Pub 334 Small Business Tax Guide 2023).
How can you reduce COGS?
Negotiate supplier discounts, adopt lean production, and improve demand forecasting to cut carrying costs (McKinsey Operations Review 2023).
What documentation supports COGS during an audit?
Keep purchase invoices, inventory counts, and cost worksheets; “adequate records must support every COGS figure” (IRS Audit Techniques Guide 2022).
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