Calculate the cost of goods sold is to use the periodic inventory system, which uses the following formula: Beginning inventory + Purchases-Ending inventory = Cost of goods sold.
1 The periodic method of inventory involves doing an inventory count at the end of each period, then mathematically calculating Cost of Goods Sold. 2  FIFO (first-in, first-out) is the assumption that the oldest units of inventory are sold before the newer units. Under the “First-In, First-Out” method of calculating CoGS, we assume that the oldest units of inventory are always sold first. So in the above example, we’d assume that Maggie sold all of her $3 shirts before selling any of her $3.50 shirts. To compute cost of goods sold, start with the cost of beginning inventory of finished goods, add the cost of goods manufactured, and then subtract the cost of ending inventory of finished goods. Suppose your chocolate milk factory started out with $2,000 worth of beginning inventory of finished goods. To compute this amount, simply start with the number of units in beginning inventory of finished goods. Add the number of units manufactured, and subtract the number of units in ending inventory of finished goods. In your chocolate milk factory, suppose that you started the year with 400 gallons A: The first in, first out, or FIFO, method is a cash flow assumption commonly used to determine cost of goods sold, or COGS.  The cost of goods sold is the total expense associated with the goods sold in a reporting period. One way to calculate the cost of goods sold is to aggregate the period-specific expense listed in each of the general ledger accounts that are designated as being associated with the cost of goods sold. An alternative way to calculate the cost of goods sold is to use the periodic inventory system, which uses the following formula: Beginning inventory + Purchases-Ending inventory = Cost of goods sold. Thus, if a company has beginning inventory of $1,000,000, purchases during the period of $1,800,000, and ending inventory of $500,000, its cost of goods sold for the period is $2,300,000 First-In, First-Out (FIFO) Method. First-In, First-Out (FIFO) is one of the methods commonly used to calculate the value of inventory on hand at the end of an accounting period and the cost of goods sold during the period. Use the following information to calculate the value of inventory on hand on Mar 31 and cost of goods sold during March in FIFO periodic inventory system and under FIFO perpetual inventory system. Your cost of goods manufactured was $18,000, and your ending inventory of finished goods was $500: You have $19,500 in cost of goods sold, an amount that goes right to the income statement. To figure out the cost per unit, divide the total cost by the 4,200 units sold: $3.64 ($19,500 ÷ 4,200 gallons). As you may know from your financial accounting course, retailers use this same formula. To compute this amount, simply start with the number of units in beginning inventory of finished goods. Add the number of units manufactured, and subtract the number of units in ending inventory of finished goods. In your chocolate milk factory, suppose that you started the year with 400 gallons Thus LIFO assigns the cost of newer inventory to cost of goods sold and cost of older inventory to ending inventory account. This method is exactly opposite to first-in, first-out method. Last-In, First-Out method is used differently under periodic inventory system and perpetual inventory system.  When using the periodic method of inventory, Cost of Goods Sold is calculated using the following equation: Beginning Inventory + Inventory Purchases – End Inventory = Cost of Goods Sold. This equation makes perfect sense when you look at it piece by piece. Under the “First-In, First-Out” method of calculating CoGS, we assume that the oldest units of inventory are always sold first. So in the above example, we’d assume that Maggie sold all of her $3 shirts before selling any of her $3.50 shirts. Subtract the companies ending inventory balance from the number calculated in Step 2. Ending balance is on the company&amp;#039;s balance sheet. In the example, the company had ending inventory of $200,000 on Dec. 31, so $600,000 minus $200,000 equals cost of goods sold of $400,000 for the year. Add any purchases of inventory to the beginning inventory. In the example, the company made a total of $500,000 of inventory purchases for the year. So, $500,000 plus $100,000 equals $600,000.
http://www.obliviousinvestor.com/how-to-calculate-cost-of-goods-sold-cogs/ http://www.dummies.com/how-to/content/how-to-compute-cost-of-goods-sold.html http://www.investopedia.com/ask/answers/111714/how-do-i-calculate-cost-goods-sold-cogs-using-first-first-out-fifo-method.asp http://www.accountingtools.com/questions-and-answers/how-to-calculate-the-cost-of-goods-sold.html http://accountingexplained.com/financial/inventories/fifo-method http://www.dummies.com/how-to/content/how-to-compute-cost-of-goods-sold.html http://accountingexplained.com/financial/inventories/lifo-method http://www.obliviousinvestor.com/how-to-calculate-cost-of-goods-sold-cogs/ http://smallbusiness.chron.com/calculate-cost-goods-1665.html
how do i compute the cost of goods sold