is unique, she needs to specifically identify each unit in her accounting to calculate COGS and gross profit. Here are her sales for August:
August items Price purchased Price sold Gross profit
Speedy duffle $500 $1,200 $700
Quilted flap purse $1,200 $2,900 $1,700
Epi coin purse $50 $300 $250
Gilded gold purse $1,500 N/A N/A
The COGS in this case would be the sum total of any items Jane has not yet sold, so $1,500.
The benefit to using the specific identification method is that your COGS will always be accurate, as long as you keep track of inventory in your accounting. With this method, you can see which styles are selling well, and adjust your investment in product accordingly.
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Weighted average cost
If you sell something that is constantly restocked, like groceries, you can use the weighted average cost method to determine the likely cost of goods sold at any point based on an average per-unit cost.
To use this method, divide the cost of goods available for sale by the number of units available for sale. This yields the weighted average cost per unit. When looking at costs during a similar time period next year, you can use this average cost per unit to determine COGS.