How To Calculate Cost of Goods Sold

Last Updated on August 16, 2023 by Jake Sheridan

In this tutorial, you will learn how to calculate the cost of goods sold in Google Sheets.

How To Calculate Cost of Goods Sold in Google Sheets

The cost of goods sold (COGS) is a key financial measure that indicates the total cost of producing your goods and services. It includes all the direct costs associated with producing the goods or services you sell, such as the cost of materials, labor, and other costs such as commissions.

We can calculate the cost of goods sold for a quarter using the following formula: COGS = beginning inventory + purchases – ending inventory.

Simply put, we have an initial amount derived from products not sold in the previous quarter, and we add any additional amount purchased during that period. We then remove the cost of any merchandise left unsold from our inventory.

Let’s take a look at a sample scenario. Suppose you are a business that sells shoes with a starting inventory worth $20,000. By the end of the quarter, you have an ending inventory of $6,000. If you made a total amount of $10,000 in purchases, we can see that the cost of goods sold is $20,000 + $10,000 – $6,000 = $24,000.

It is important for businesses to track the cost of goods sold as it gives them an indication of how much it costs to make their products and how much profit they are actually making from their sales.

In this guide, we will show you how to calculate cost of goods sold in a Google Sheets spreadsheet.

How To Find the Cost of Goods Sold in Google Sheets

Here’s how to find the cost of goods sold in Google Sheets.

Step 1

First, we must specify the beginning inventory. This is simply your company’s inventory from the previous period.

Step 2

Next, we must identify the cost of all additional purchases within the period. All purchases are added to the beginning inventory.

Step 3

Next, we should identify the ending inventory. This value refers to the amount left in our inventory after the end of the period.

Step 4

We can find the COGS or cost of goods sold by adding the values for the beginning inventory and additional purchases and subtracting the value of our ending inventory.

In our example above, we start our quarter with a beginning inventory of $15,000. During the period we spent $5000 to acquire more for our inventory. Our cost of goods sold is $12,000 after subtracting the amount not sold during the quarter (our ending inventory of $8000).

Summary

This guide should be everything you need to calculate the total cost of goods sold in Google Sheets.

You may make a copy of this example spreadsheet to test it out on your own.