Cost of Goods Sold (COGS) Calculator

How it is calculated

The tool uses the periodic-inventory formula COGS = O + P - C, where O is the value of inventory at the start of the period, P is what you purchased during it and C is the inventory still on hand at the end. All three are money amounts for the same period and the same valuation method (cost, not selling price), and none may be negative. The result is shown in dollars with two decimals. Closing inventory cannot be larger than opening inventory plus purchases, because you cannot end with more stock than was available; if it is, the tool shows no result so the count can be rechecked. Freight, labour or manufacturing overhead are not added unless you include them in the purchases figure.

Common mistakes

• Valuing the closing stock at selling price instead of cost; this understates COGS and inflates profit.
• Including purchases not yet received, or leaving out returns to suppliers; the purchases figure should reflect what really entered inventory.
• Mixing balances from different periods, such as a year-end stock count with one month of purchases.
• Forgetting that stolen or spoiled stock is missing from the closing count, so it ends up inside COGS rather than being shown separately.
• Entering a closing count above opening plus purchases. The tool then shows no result; recount instead of adjusting the other figures to make it work.