How do I calculate the cost of goods sold (COGS)?
An example of an AI chatbot conversation about calculating COGS for businesses.
How do I calculate the cost of goods sold (COGS) for my business?
To calculate COGS, you need to know your beginning inventory, purchases, and ending inventory. The formula is: COGS = Beginning Inventory + Purchases - Ending Inventory.
Can you give me an example using numbers?
Sure! If your beginning inventory is $10,000, you purchased $5,000 worth of goods, and your ending inventory is $3,000, then COGS = $10,000 + $5,000 - $3,000 = $12,000.
What if I have multiple products?
You would calculate COGS for each product separately and then sum them up. Just apply the same formula for each product's inventory.
Are there any other costs I should consider?
Yes, consider additional costs like shipping, handling, and any direct labor costs associated with producing the goods.
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