Cogs

[ITL]

Cost of goods sold, how do you figure it out?

I thought it was the total amount of the items you have sold over the period (month, day, year, whatever). But I guess it also includes the shipping you paid to have them delivered to you?

If thats the case, how can this be? I can see it if you sold everything that was delivered from that particular shipment, but what if you only sold half? You still add on the whole shipment?

I think I need more than Quickbooks I need a psycho-therapist for aloowing my wife to start this...

[ChaosJester]

let's say you buy 10,000 pieces at $1 and pay $300 to have them shipped

you've paid $10,300 to get those goods to your home.

Figuring in the shipping of $300, the pieces no longer COST you $1..they cost you $1.03 each.

The timeframe in which you sell them means nothing, your COG is still the same for that shipment of goods.

does that answer your question?

[ITL]

That somewhat answers it, so here is part two:

If you had a beginning of the year inventory of 0, and then bought that 10,000 units at $1 a piece throughout the year with $300 in shipping, and the ending inventory is 5000 units (or $5000) the costs of goods sold in that year is 5300?

I am in an accounting class and my teacher does not explain things real well, even one on one. Please bear with me if my questions seem stupid.

[ChaosJester]

If you had a beginning of the year inventory of 0, and then bought that 10,000 units at $1 a piece throughout the year with $300 in shipping, and the ending inventory is 5000 units (or $5000) the costs of goods sold in that year is 5300?

The COG SOLD (if you sold half of your inventory of 10,000) would be $5150 which is 5000x1.03

your remaining inventory that you still have around would still have a cOG of $1.03 each.


make sense?

Just because you haven't sold everything when it comes time to balance the books, it doesn't change the value of each piece being $1.03 with the shipping costs integrated.