How this calculator works
Goods available for sale are everything on hand at the start plus everything bought or produced during the period. Whatever is still on hand at the end stays as inventory, and the rest is the cost of goods sold. This is a periodic inventory calculation: it uses two stock counts and a purchases total rather than tracking every sale. Use consistent cost figures, and do not include selling, admin or financing costs, which belong below the gross profit line.
Formula
Goods available for sale = opening inventory + purchases. Cost of goods sold = goods available for sale - closing inventory.
Worked example
Opening inventory of $20,000 plus $50,000 of purchases gives $70,000 of goods available. With $15,000 still on hand at the end, cost of goods sold is $55,000 over the period.
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Frequently asked questions
What belongs in purchases?
The cost of stock bought or produced for resale, including freight inwards and duty, net of purchase returns and allowances. Exclude freight outwards to customers, which is a selling cost.
How does this differ under FIFO or average cost?
Those methods assign cost to each sale continuously and change the value of closing inventory, so they change COGS too. This periodic formula gives the same answer only when all units carry the same unit cost. For layered purchases, use the FIFO calculator.
Why is a negative result rejected?
If closing inventory exceeds the goods available, the figures are inconsistent: stock has appeared from somewhere. The calculator rejects that case so a data error is not passed off as a negative cost of sales.