AP2 - Cost of goods
Nickynoo
Registered Posts: 34 Epic contributor 🐘
Morning,
Can someone clarify if to calculate the cost of goods sold is
net profit - mark up = Cost of goods?
Then purchases would be Open inventory + Cost of goods - Cl;osing Inventory?
Have my exam on monday :001_unsure:
Thanks
Can someone clarify if to calculate the cost of goods sold is
net profit - mark up = Cost of goods?
Then purchases would be Open inventory + Cost of goods - Cl;osing Inventory?
Have my exam on monday :001_unsure:
Thanks
0
Comments
-
Opening Inventory
+ Purchases
- Closing Inventory
= Cost of Goods Sold
Sales Revenue
-Cost of Goods Sold
= Gross Profit
And if you re-arrange the formula
Sales Revenue
-Gross Profit
=Cost of Goods Sold
Gross Profit...... = Profit Margin
Sales Revenue
Gross Profit...... = Mark up on cost
Cost of SalesSandy
sandy@sandyhood.com
www.sandyhood.com0 -
Thank you, fingers crossed for Monday0
-
How about working out the purchases?
On a paper received by the tutor we were given the Sales Revenue, and the Opening and Clsoing Inventory, we had to calculate the cost of goods then the purchases?0 -
Opening Inventory
+ Purchases
- Closing Inventory
= Cost of Goods Sold
would rearrange to
Purchases = Cost of Goods Sold + Closing Inventory - Opening Inventory
Basic algebra is what you need to sort them out.
Opening Inventory + Purchases - Closing Inventory = Cost of Goods Sold
---- (Add Closing Inventory to each side)
Opening Inventory + Purchases - Closing Inventory + Closing Inventory = Cost of Goods Sold + Closing Inventory
---- (The Closing Inventory on the left side of the equation cancel each other out)
Opening Inventory + Purchases = Cost of Goods Sold + Closing Inventory
---- ( minus Opening Inventory to each side)
Opening Inventory + Purchases - Opening Inventory = Cost of Goods Sold + Closing Inventory - Opening Inventory
---- (the Opening Inventory on the left side cancel each other out)
Purchases = Cost of Goods Sold + Closing Inventory - Opening Inventory0
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