Cost of Goods Sold Formula

Cost of Goods Sold Formula

Cost of goods sold is one of the important costs in the financial accounting system, because this cost is used to calculate the gross profit for the year (period). Cost of Goods sold formula is given below

Cost of Goods Sold=Opening Finished Goods + Good Manufactured – Closing Finished Goods

Example

Opening Finished Goods =        10,000

Goods Produced =                   16,000

Closing Finished Goods             15,000

Solution

Opening Finished Goods =        10,000

Add: Goods Produced =            16,000

Closing Finished Goods            (15,000)

Cost of Goods Sold               11,000