How to Calculate COGS for a Manufacturer

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This video shows an example of how to calculate Cost of Goods Sold for a manufacturer.

Manufacturers cannot calculate Cost of Goods in the same way that a retailer calculates Cost of Goods Sold, because manufacturers build their own inventory (in contrast to retailers, which purchase their inventory).

For manufacturing firms, Cost of Goods Sold is equal to the beginning Finished Goods Inventory plus Cost of Goods Manufactured minus ending Finished Goods Inventory.

To calculate Cost of Goods Manufactured, you add the total manufacturing costs to the beginning Work-in-Process Inventory and then subtract the ending Work-in-Process Inventory.

Total manufacturing costs are direct materials used, direct labor, and manufacturing overhead.—
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Your playlist is very useful! i understand everything!!!

juansebastiansuavitaagudel

Very clear and easy to understand. You the man!

mushroomthump

thanks for the video, very clear and helpful

backpacker

your videos are seriously so helpful ;')

kimdaleman

fantastic! thank you so much youtube teacher

fazoodle

First, also thanks for this information man really appreciate it

jetjet

Would packaging be included in the sum for finished goods?

parnessianparpio

Can you explain work in progress more please?

killerzcat

First I want to thank you very much
Second I wonder if I have packing inventories that is consider from cogs item or not

سامحسيد-صج

Hi,

What’s is considered ‘raw material purchase’?

I am just a bit confused as we use to place call offs and schedule orders. For instance, If I place an order for 5000 of product x and I can call them off whenever I want for the next 24 months. I haven’t paid a penny yet. Would I considered that order for COGM?

Many thanks

samuelmaiia

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