Cost Of Sales Equation

wannabebean
wannabebean Registered Posts: 72 ? ? ?
Hello All

Cost of Sales Equation

Ok. Opening Inventory + Purchases - Closing Inventory = CoS

But I seem to remember there was a much more elaborate equation than this and I can't find it (would have been Level 3 Costs and Revenues)

Something that included Sales Returns and Carriage In etc?

Does anyone know the full equation - I suspect they will trhough in a CoS with Sales or Purchase returns into the question for the Statement of Comprehensive Income :)

Comments

  • crispy
    crispy Registered Posts: 465 Dedicated contributor ? ? ?
    Hello,

    You are correct - Carraige In should be added into Cost Of Sales, Carriage Out is an overhead (Distribution Cost).

    Sales Less Sales Return = Turnover
    Op. Stock + Purchases - Purchases Returns + Carraige In - Cl. Stock = Cost Of Sales

    Discounts Received would be classified as Other income, Discounts Allowed are an Overhead - not a Cost of Sale.

    Cost of Sales may include other directly attribtable expenses (like manufacturing costs incl. labour, depreciation) depending on the company's policy.

    This is how I would see it :)
    abd-ellahisouth59
  • wannabebean
    wannabebean Registered Posts: 72 ? ? ?
    Thanks

    Hello

    Thank you for the response. Wouldn't surprise me if they dropped something like this in :)
  • sayyam
    sayyam Registered Posts: 9
    just had an exam and it was in the exam like this
    ravenue 83890
    return in 14
    return ou 23
    opening inventory 3643
    closing inventory 6742
    purchases 3849
  • sayyam
    sayyam Registered Posts: 9
    i have subtracted in words from sale and putwords from purchases then rest you know....now i am not sure have i don it right or wrong
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