Making Cost of Goods Sold Statement:

COGS or Cost of Goods Sold is the a complete statement in which all the direct and indirect Cost contributions are take place which are directly or indirectly involve in the complete production. It starts with the beginning inventory add the new purchases and fright charges then the direct raw material , direct labor costs and factory over heads and all the other relevant cost which are show bellow in the example picture are the part of the complete production. That all cost contributions and subtractions give us the information about complete manufacturing activity. The formula for the Cost of Goods Sold is as follows:

Key Points of COGS:

These are the key points which we use to make that Cost of Goods Sold Statement. But at the start of the COGS we must need to write the accounting period with it. The key points of the COGS are as follows:

Beginning Inventory:

Beginning Inventory means the inventory which available at the beginning of the accounting period.

Direct Materials:

Direct Materials are those materials which are available for consumption after purchases and beginning inventory and it is directly related to our manufacturing.

Direct Labors:

Direct Labor Cost is the cost of labor which Company need to spent over the complete manufacturing activity and it is directly related to our manufacturing activity.

Factory Overhead:

All the expenses like wages, salaries, insurance, depreciation and many more like them are the part of factory overhead.

Work In Progress Inventory:

The Beginning inventory which is in progress is know as work in progress inventory beginning and closing. We always add the work in progress beginning and less the work in progress of ending inventory.

Finished Goods Inventory:

The finished goods always be less form the Cost of goods available for sales.

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