fbpx
Connect with us
Uncategorized

How to Calculate Cost of Goods Sold

Published

3 years ago

on

For many people, Cost of Goods Sold (COGS) is a new term. In fact, there is a good chance that your local accountant or bookkeeper has never seen this line item on an income statement, or even heard of the term. However, it is a very important line item for businesses, so much so that it is often included in financial statements prepared by accountants. Also, most business owners are not familiar with this line item, but they should be.

This post is going to help those who are new to the world of books and publishing.  The whole idea of the cost of goods sold is  to determine the cost of the book you have written.  This post will explain how to calculate the cost of goods sold, and why you may want to calculate this number, or even how to calculate this number in the first place.  This post will also explain the calculation of the sales tax due on your profit, as well as the additional taxes that go on top of that number.  This post will also help to explain why those additional taxes are so important.  This post is geared toward those of you who are starting your first book.

Home » Bookkeeping » Finding Your True Cost of Goods Manufactured

Jun 25, 2020
Bookkeeping by Adam Hill
Cost of Goods Manufactured (COGM)

Direct materials, direct labor, and overhead all get input into the production process. Therefore, to compute the cost of goods manufactured, think about all product costs, including not only direct materials but also direct labor and overhead. The cost of goods manufactured (COGM) is a calculation that is used to gain a general understanding of whether production costs are too high or low when compared to revenue. The equation calculates the manufacturing costs incurred with the goods finished during a specific period. In other words, the total amount of expenses for a company to turn inventory into the finished product.

The costs of goods manufactured is an accounting term used to describe a statement or schedule that depicts the total costs of production for a company during a specific time period. The COGM is the total amount a company spends to produce goods, turn them into inventory and put them up for sale. This calculation takes into account all expenses related to the manufacturing of inventory including direct materials, factory overhead and labor expenses.

The value of an accurate COGS calculation can provide a company with insight into profitability, allow long term strategic planning, improve the pricing of products and act as a guideline for taxes and investment. Whether done manually or using software, the COGS calculation should be accurate and based on real data to provide these things. Start with the Beginning Raw Materials Inventory value and add all raw materials purchased during the selected accounting period.

The cost of goods manufactured is a calculation of the production costs of the goods that were completed during an accounting period. Manufacturing overhead is all costs tied to your organization’s manufacturing operations. These are the ancillary costs in addition to direct materials and labor, and they all must be listed under the cost of goods sold on a financial statement. Accountants within your company have to note the overhead cost for each unit created by your production team. Property taxes and insurance costs need to be factored in when you’re coming up with the total overhead cost per unit as well.

COGS may also be affected depending on the inventory costing method used by the company such as First in First Out (FIFO), Last in First Out (LIFO), or Average Cost Method. As companies have different levels of complexity and scale, each will have to choose the method that works best for their business.

The costs of goods manufactured may also be referred to as the cost of goods completed. The work in progress inventory is the next step in completing the cost of goods sold statement. After adding different materials to the production line, there are three additional production costs. These costs include direct materials, direct labor and overhead costs associated with manufacturing. All three costs are collectively called the “Manufacturing Costs.” The total inventory will be added to the Total Manufacturing costs and from this figure, the ending inventory will be deducted.

Cost of goods manufactured$1,100,000Note how the statement shows the costs incurred for direct materials, direct labor, and manufacturing overhead. The statement totals these three costs for total manufacturing cost during the period. When adding beginning work in process inventory and deducting ending work in process inventory from the total manufacturing cost, we obtain cost of goods manufactured or completed. Cost of goods sold does not appear on the cost of goods manufactured statement but on the income statement. This formula will leave you with only the cost of goods that were completed during the period.

Raw materials are inventory that is waiting to be used in the production of goods. To calculate the cost of goods manufactured, you must add your direct materials, direct labor, and manufacturing overhead to get your businesses’ total manufacturing cost. Next, you will add the beginning work-in-process and subtract the ending work-in-process from the total manufacturing cost to get the cost of goods manufactured. The last part of the calculation you need to make for the cost of goods manufactured formula is for the ending WIP inventory. This concept describes all inventory that shows signs of completion, but it stills needs to be confirmed if production can be finalized.

This statistic must be known so it can be reported after each accounting period. You might be able to see if your production is on schedule or if you have to make key decisions on production costs. Make sure to subtract this figure once you add up the previous figures to get your total cost of goods manufactured. The direct labor part of the total manufacturing calculation refers to how much was paid in labor costs for a certain time period. This is usually straightforward and can be calculated by multiplying the number of hours of work with the hourly rate for each employee.

Cost of goods manufactured$1,100,000Note how the statement shows the costs incurred for direct materials, direct labor, and manufacturing overhead.
The statement totals these three costs for total manufacturing cost during the period.

Again, the total manufacturing cost is the aggregate of direct labor cost, direct material cost and factory overhead. Cost of goods manufactured is based on the amount of work-in-process completed. This work-in-process includes costs of direct materials put into production, plus direct labor and overhead. As a reminder, COGS is it’s the amount of money a company spends on labor, materials, and certain overhead costs relating to producing a product or service.

This inventory is the initial inventory that is placed right at the beginning of the cost of goods sold statement. It includes all the raw materials purchased for manufacturing a specific product. While making the cost of goods sold statement, make sure that all direct and overhead raw material costs are accounted for. After adding all raw materials, subtract the ending inventory from the raw material inventory account towards the end of one period. These materials await for transfer to the work in progress inventory, where the labor costs are included in the statement.

What Does Cost of Goods Manufactured Mean?

The total manufacturing cost consists of the total cost of all goods the company has at least begun to sell during a given period. To this the owner must add work in process, or work in progress, which is the cost of goods that have begun production but are not yet ready to be sold. Using the beginning Work in Process (WIP) inventory, subtract the ending WIP inventory value and add to the Total Manufacturing Costs in step 2.This is the Cost of Goods Manufactured (COGM). Companies can also hold onto materials they receive from suppliers and list the value of them for accounting purposes.

Example calculation of Cost of Goods Manufactured (COGM)

Be sure you know the number of products you have waiting to be completed to document your inventory properly, and add them your manufacturing overhead, direct materials and direct labor costs. Unfortunately, it is not as simple as it seems, as each working part has multiple equations within. The schedule reports the total manufacturing costs for the period that were added to the work‐in‐process (WIP). It then adjusts these costs for the change in the WIP inventory account to arrive at the cost of goods manufactured.

Manufacturing overhead costs refer to indirect costs that are paid regardless of the production of inventory. For example, rent for a factory building and depreciation on equipment are considered manufacturing overhead costs. The cost of goods manufactured schedule is used to calculate the cost of producing products for a period of time. The cost of goods manufactured amount is transferred to the finished goods inventory account during the period and is used in calculating cost of goods sold on the income statement. Prepare a schedule of cost of goods manufactured; assume all raw materials used in production were direct materials.

The $500 of light bulbs purchased was included in the Raw Materials Inventory account, but since the bulbs are not direct materials, they were not recorded as part of the direct materials cost. Later, Friends Company used $100 of light bulbs in the manufacturing process, and this cost was recorded as part of the Factory Overhead cost. These platforms provide real-time data and advanced analytics that can help improve accurate costing in areas such as WIP calculation, manufacturing overhead, and direct labor.

Determining Direct Labor and Manufacturing Overhead

This is nothing but the cost sheet of the company and it includes prime cost as well. Hence adding all of the manufactured stage inventory and all the direct expenses will sum up to cost of good manufactured and when one divides the same by the number of units produced will yield the cost of goods manufactured. (Factory overhead will include factory expenses like rent and utilities). The total manufacturing portion of this formula refers to the direct materials, direct labor and manufacturing overhead that was paid for during a certain period of time for the production of goods. The direct materials can be calculated by adding the beginning raw materials to the purchases made and subtracting that total from the ending raw materials.{“@context”:”https://schema.org”,”@type”:”FAQPage”,”mainEntity”:[{“@type”:”Question”,”name”:”How do we calculate cost of goods sold?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:” The cost of goods sold is the total cost of all the products that a company has sold during a specific period.”}},{“@type”:”Question”,”name”:”What is included in cost of goods sold?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:” Cost of goods sold is the cost of all the products that a company sells during a specific period.”}},{“@type”:”Question”,”name”:””,”acceptedAnswer”:{“@type”:”Answer”,”text”:””}}]}

Frequently Asked Questions

How do we calculate cost of goods sold?

The cost of goods sold is the total cost of all the products that a company has sold during a specific period.

What is included in cost of goods sold?

Cost of goods sold is the cost of all the products that a company sells during a specific period.

Related Topics:
Continue Reading

Uncategorized

Enchanted Woods and Forest Slots: Exploring the Mystical Realm of Nature

Published

7 days ago

on

November 23, 2023

By

Image3

In the realm of online casino gaming, a genre taps into the enchanting allure of nature and woodland mysteries: Forest Slots and Enchanted Woods Slots. These slots transport players into the heart of lush forests, where mythical creatures, ancient trees, and hidden treasures await discovery – play it here.

In this article, we will delve into the captivating world of Forest Slots and Enchanted Woods Slots, exploring their captivating features, woodland themes, and their magical gaming experience.

Immersed in the Wonder of Nature with Forest Slots

Forest Slots and Enchanted Woods Slots represent a captivating subgenre within online slot games, drawing inspiration from forests’ lush beauty and mystical aura. They offer a fusion of natural aesthetics, woodland creatures, and the potential for substantial real-money rewards. These slots appeal to fans of nature and wildlife and players seeking an escape into a world of tranquility and enchantment.

Key Features of Forest Slots and Enchanted Woods Slots

Lush Woodland Aesthetics

The standout feature of Forest Slots and Enchanted Woods Slots is their ability to recreate the serene and mystical ambiance of the forest. These games often boast towering trees, moss-covered stones, and enchanting glades—the graphics and animations transport players to a world of natural wonders, creating an immersive gaming experience.

Iconic Forest Symbols

Forest Slots and Enchanted Woods Slots feature symbols emblematic of the woodland realm. Players can expect to encounter woodland creatures like deer and owls, ancient trees, magical toadstools, and the elusive fairies and sprites that inhabit these enchanted woods. These symbols add to the game’s visual allure and play a critical role in determining winning combinations and triggering bonus features.

Woodland Creatures and Mystical Beings

To enhance the forest experience, these slots often incorporate encounters with mythical creatures and mystical woodland beings. Players may interact with fairies, elves, unicorns, and other fantastical inhabitants of the enchanted woods. These interactions add an extra layer of enchantment and engagement to the gameplay, providing players with a sense of wonder and magic.

Image1

Forest Magic Bonus Rounds

In Forest Slots and Enchanted Woods Slots, players often engage in bonus rounds that tap into the mystical energies of the forest. These may involve participating in magical ceremonies, uncovering hidden pathways, or seeking the blessings of ancient forest guardians. These bonus rounds immerse players in the enchanting world of the forest, intensifying the gaming experience.

Themes in Forest Slots and Enchanted Woods Slots

These slots come in a variety of themes, each offering a different woodland adventure:

Fairy Glades

These slots focus on the magical realms inhabited by fairies and sprites, where players can explore glades, seek hidden treasures, and receive the blessings of forest spirits.

Mystical Creatures

In these games, players encounter mythical creatures like unicorns, centaurs, and magical creatures as they explore the forest’s depths in search of hidden wonders.

Ancient Trees and Guardians

These slots revolve around the wisdom and magic of ancient trees, where players seek out the guidance and blessings of these wise woodland sentinels.

Woodland Treasures

In these games, players embark on quests to discover hidden treasures and uncover the riches that lie within the heart of the enchanted woods.

Winning Real Money in Forest Slots and Enchanted Woods Slots

While the immersive themes and woodland aesthetics are the main attractions, players can also win real money while enjoying Forest Slots and Enchanted Woods Slots. These games offer various opportunities to form winning combinations, trigger bonus rounds, and accumulate substantial payouts, much like traditional slots.

Image2

Conclusion

Forest Slots and Enchanted Woods Slots offer a uniquely immersive experience within online casino gaming. Whether you’re a fan of magical glades, encounters with mystical creatures, seeking the wisdom of ancient trees, or embarking on quests for woodland treasures, there’s a Forest Slot or Enchanted Woods Slot that can transport you to the heart of nature’s mysteries. With enchanting visuals, iconic woodland symbols, and engaging gameplay, these slots provide a truly unforgettable gaming experience. So, step into the enchanted woods and let the magic of nature guide you on a journey of wonder and discovery!

Continue Reading

Uncategorized

Acquiring Sweeps Coins in Sweeptastic for 2023

Published

7 days ago

on

November 23, 2023

By

Image1

 Introduction

Sweeptastic is a newly launched sweepstakes casino that is currently in the early stages of establishing itself in the industry. Although there are areas, such as its game library and user interface, that are still undergoing refinement, the casino shows potential, particularly with its attractive welcome offer and continuous promotions. Despite a somewhat limited range of games, Sweptastic offers a decent entry point for players looking to explore the world of sweepstakes casinos.

Legitimacy of Sweeptastic Casino

Assessing the legitimacy of an online gaming site involves subjective judgment, but there are signs and factors that can help determine the intention behind a platform.

One important consideration is the transparency of the owner company, and in the case of Sweeptastic, this information is readily available on the casino’s site – Heuston Gaming Limited with registration number 104624.

Additionally, Sweeptastic has taken steps to enhance transparency and player safety. They provide a page displaying the Return to Player (RTP) of all available games and have a Responsible Gaming page that discusses how players can have the best gaming experience while maintaining control over their habits.

With these measures, including comprehensive information and tools for self-control, Sweeptastic demonstrates a commitment to ensuring the safety and well-being of its players.

Currencies

Sweptastic has a straightforward system with two virtual currencies: Gold Coins and Sweepstakes Coins, also known as Lucky Coins.

Lucky Coins (Gold Coins)

In Sweptastic, Gold Coins go by the name Lucky Coins. These coins are exclusively for playing games for fun and hold no real-world value. While the casino generously provides them for free, you also have the option to purchase additional Lucky Coins. They serve as a useful tool for exploring games before committing your valuable Sweepstakes Coins.

Sweepstakes Coins

Critical to the sweepstakes casino experience, Sweepstakes Coins are the virtual currency that transforms your in-game winnings into real money. Sweptastic retains the original name, emphasizing that winnings in Sweepstakes Coins can be redeemed for actual cash. Notably, these coins cannot be bought; however, Sweeptastic offers them abundantly through various promotions or as a bonus when you purchase Lucky Coins.

Promotional Offers at Sweeptastic

Promotions at Sweeptastic are designed to set high standards, offering players ample opportunities to enjoy their favorite games and potentially win real money rewards without the need for any purchases. Let’s delve into the details of each promotional offer:

Signup Bonus

Sweeptastic stands out by providing one of the most generous free welcome bonuses in the sweepstakes casino realm – a whopping 27,777 Gold Coins + 10 Sweepstakes Coins.

Image3

At the same time, the full offer requires account verification; merely registering grants you an initial reward of 10,000 Lucky Coins (Gold Coins).

Daily Login

Acknowledging active members, Sweeptastic adopts the common practice of a Daily Login Bonus but distinguishes itself with a substantial amount of freebies. Simply log in each day, and the casino automatically boosts your balance with 1,000 Lucky Coins.

Happy Hours

For early birds, Sweeptastic introduces Happy Hours, generously gifting 3,000 Lucky Coins every morning between 7 am and 10 am. This bonus is seamlessly added to your account upon login, requiring no additional steps or claims.

First Purchase Offer

While Sweeptastic lavishes players with substantial free coins, the extensive gaming catalog may lead to their quick depletion. In anticipation of this, the social casino presents two exclusive offers for your initial coin purchase:

  • $17.49 pack – 25,000 LC + 25 SC (30% off)
  • $29.49 pack – 45,000 LC + 45 SC (35% off)

Purchase Methods

Now that you’re acquainted with Sweeptastic’s virtual coins let’s explore the options available if you decide to make a purchase on this casino-style gaming platform. Sweeptastic offers six predefined Lucky Coin bundles, each accompanied by complimentary Sweepstakes Coins. You can make purchases using widely accepted bank cards like Visa, Mastercard, and American Express, among others. Additionally, popular online payment providers are supported, ensuring a seamless transaction experience based on our testing.

Redeeming Prizes

For many players, the most exciting aspect is whether Sweptastic truly pays out real cash prizes. The answer is a resounding yes, and the redemption process is notably faster compared to other sweepstakes casinos. You have various redemption options, including bank transfers, gift cards, and even merchandise if you prefer tangible rewards.

Image2

It’s crucial to note that to complete the redemption process; you must verify your account through KYC (providing documents for identity, address, phone, and bank account verification), wager the Sweepstakes Coins at least once (as they are received as a bonus), and have a Sweepstakes Coins balance equivalent to at least $100.

Conclusion

Since its inception, Sweeptastic has set the standard for how things should be done in the sweepstakes casino world. Whether it’s bonuses, games, or player care, this social casino brand truly stands out.

Continue Reading

Uncategorized

Enhancing User Engagement And App Discovery: The Impact of User-Friendly Interfaces in App Catalogs

Published

2 weeks ago

on

November 14, 2023

By

Image3

Mobile applications have become an integral part of our daily lives. From social networking to productivity tools, there is an app for everything. With millions of apps available across various platforms, app catalogs are crucial in helping users discover new applications. However, the success of these catalogs greatly depends on user experience, particularly the user-friendliness of their interfaces.

The Significance of User-Friendly Interfaces

User-friendly interfaces are essential elements of app catalogs as they directly influence how users interact with and explore the available apps. A well-designed and intuitive interface can significantly enhance the overall user experience. Here are some key factors that highlight the significance of user-friendly interfaces:

1.1 Navigational Ease

One of the primary benefits of a user-friendly interface is navigational ease. When users can easily browse through app categories, search for specific apps, and access relevant information, they are more likely to engage with the catalog for longer periods.

1.2 Visual Appeal

The visual appeal of an app catalog matters. An attractive and well-organized layout can captivate users and encourage them to explore further. A cluttered or confusing interface, on the other hand, can deter users from using the catalog.

1.3 User Feedback

User-friendly interfaces often include features for user feedback, such as ratings and reviews. This feedback helps users make informed decisions about which apps to download, enhancing their overall experience.

Comprehensive App Collection

APPiX360’s extensive app collection caters to a wide array of interests and needs. The platform regularly updates its offerings with the latest and most popular apps, ensuring users have access to the newest trends and tools. The importance of user reviews and ratings in aiding informed decisions is a testament to the platform’s user-centric approach. The platform’s commitment to ensuring safe downloads is exemplified through its stringent vetting process, which can be illustrated through the safe downloading of the Pin-up app.

Impact on User Engagement

User engagement is a crucial metric for app catalogs. It measures how actively users interact with the catalog, and user-friendly interfaces can have a profound impact on engagement levels:

2.1 Longer Time Spent

A user-friendly interface encourages users to explore more apps, leading to longer sessions within the catalog. When users find it easy to navigate, they are likely to spend more time searching for new apps and discovering content.

2.2 Higher Retention Rates

Apps with user-friendly interfaces tend to have higher retention rates. Users are more likely to return to the catalog regularly if they had a positive experience during their previous visits. This consistent engagement benefits both users and app developers.

2.3 Increased App Downloads

Improved user engagement often leads to an increase in app downloads. When users feel comfortable and confident while using the catalog, they are more likely to take the next step and download apps that pique their interest.

Image1

Impact on App Discovery

App discovery is a critical aspect of app catalogs, as it directly affects an app’s success. User-friendly interfaces play a significant role in enhancing the app discovery process:

3.1 Effective Search and Filtering

User-friendly catalogs offer efficient search and filtering options. Users can easily narrow down their choices based on categories, keywords, or ratings. This simplifies the app discovery process and helps users find relevant apps more quickly.

3.2 Personalized Recommendations

Many app catalogs use user data to provide personalized app recommendations. A user-friendly interface makes it easier for catalogs to collect and analyze user preferences, leading to more accurate and appealing app suggestions.

3.3 Social Integration

User-friendly interfaces often incorporate social features, such as sharing and following. These features enable users to discover apps recommended by their friends or influencers, fostering a sense of community within the catalog.

Image2

The Pin-Up App Download Experience

As we explore the impact of user-friendly interfaces, let’s take a closer look at the Pin-Up app download experience as an example. Pin-Up is an online casino and sports betting platform that offers a mobile app for users to enjoy their favorite games and place bets conveniently.

4.1 Navigational Simplicity

The Pin-Up app catalog boasts a user-friendly interface that simplifies the navigation process. Users can easily access different sections of the app, such as casino games, sports betting, and promotions, through a well-organized menu.

4.2 Visual Appeal

The catalog’s visual design is visually appealing, featuring vibrant colors and clear graphics. This visually engaging interface captures users’ attention and encourages them to explore the app further.

4.3 User Feedback

Pin-Up’s user-friendly interface incorporates user feedback in the form of reviews and ratings for games and sports events. This feedback helps users make informed decisions about what to play or bet on, enhancing their overall experience.

Conclusion

In conclusion, user-friendly interfaces are instrumental in shaping the success of app catalogs by positively impacting user engagement and app discovery. Navigational ease, visual appeal, and user feedback are key elements that contribute to a user-friendly experience. As demonstrated by the Pin-Up app download experience, a well-designed interface can enhance the overall user journey, leading to higher user engagement, increased app downloads, and improved app discovery. App catalogs that prioritize user-friendliness are more likely to thrive in the competitive digital landscape, benefiting both users and developers alike.

Continue Reading

Popular