Let us take the example of another company to understand the concept of cost of sales in further detail. Therefore, the company incurred cost of sales of $235,000 during the year. Calculate the cost of sales for the company based on the given information.Ĭost of Sales is calculated using the formula given belowĬost of Sales = Beginning Inventory + Raw Material Purchase + Cost of Direct Labor + Overhead Manufacturing Cost – Ending Inventory During the year, the total labor cost and manufacturing overhead that can be attributed to the production stood at $70,000 and $60,000 respectively. During the year, the company spent another $100,000 in the purchase of raw material and various other inventory items and then ended the year with an inventory of $15,000. Let us take the example of a company that had an inventory of $20,000 in stock at the beginning of the year. You can download this Cost of Sales Formula Excel Template here – Cost of Sales Formula Excel Template Cost of Sales Formula – Example #1
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