Cost of Goods Sold Calculator

This calculator uses the standard cost of goods sold formula found in government and university accounting references: cost of goods sold equals beginning inventory plus purchases and other direct costs, minus purchase returns and allowances, minus ending inventory.

Beginning inventory represents the cost of goods you had on hand at the start of the period, measured using your chosen inventory method (such as FIFO, LIFO, or weighted average) and valuation basis.

Purchases and production costs include the cost of merchandise or raw materials acquired or manufactured during the period, including amounts capitalized into inventory under your accounting policy.

Additional direct costs are costs necessary to bring inventory to its present location and condition, such as inbound freight, direct labor, and factory overhead that are capitalized into inventory and then flow through to cost of goods sold when goods are sold.

Purchase returns, allowances, and discounts reduce the cost of inventory acquired; entering them separately makes the calculation transparent and keeps your purchases input focused on gross spend before reductions.

Ending inventory represents the cost of goods still on hand at the end of the period; subtracting this amount removes unsold items from the cost of goods sold so that COGS reflects only goods actually sold during the period.

Formally, the calculator computes cost of goods sold as: COGS = Beginning inventory + Purchases + Additional direct costs − Purchase returns and allowances − Ending inventory.

This structure mirrors the approach in tax and financial reporting frameworks, but it does not choose or enforce a specific inventory costing method; you should ensure that the inventory figures you enter are prepared consistently with your accounting policies and any applicable tax rules.