In the same month, it incurred several expenses that were directly related to the production of the product it sells to its customers online. By the end of the month, it had $5000 worth of inventory left with the business. had $50,000 worth of inventory in September 2021. This is mainly because the cost of sales shows you at what cost and how well you are able to deliver goods and services to your customers.Ī cost of sales formula used to calculate the cost of goods sold is as follows.Ĭost of sales = Beginning inventory + Purchases – Ending inventory COGS is an important metric that your business should pay attention to. It does not take selling, general, and administrative expenses into account and also does not include interest expenses in its calculation. COGS is the value that represents all the costs that are linked to the production or manufacturing of the goods and services that you sell to your customers.
Business management software for in-depth insightsĬOGS is short for the cost of goods sold and is also known as the cost of sales or the cost of revenue.OPEX for a company that sells physical products.COGS for a company that sells physical products.
