Cost of Sales is the total amount spent on producing and distributing the products that a company sells. These costs vary between industries, but often include items like materials, labor costs, overhead costs and distribution costs. Some companies use the term "Cost of Goods Sold (COGS)" when referring to these costs rather than Cost of Sales.
Cost of Sales can be calculated using inventory levels at the beginning and end of a specific period. This can be done by taking the inventory value at the beginning of the recording period and add any additions to inventories during that period, then subtract the inventory value at the end of the period. The result is the value of the goods sold during that period, or the cost of goods sold.
Cost of Sales = Beginning Inventory + Additions To Inventory - Ending Inventory
Cost of Sales
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