The cost of goods sold calculator
Posted: Mon May 26, 2025 7:37 am
If you have doubts about how to categorize costs, consult with a certified public accountant (CPA).
Calculating COGS can be a headache, especially if you’re producing your own goods. If you’d rather not rely on your own math skills, here’s a COGS calculator to help you get started.
If you create your own products, you’ll need to create a spreadsheet to track the cost of raw materials and direct costs. Think of every marketing activity that it took to get sales leads, and make sure that’s factored in.
You’ll also need to define what time period you want to cover, whether america phone number list it’s monthly, quarterly, or annually. The longer the time frame, the more accurate your COGS will be. However you calculate cost of goods sold, it’s important to track all of your sales data in a CRM to ensure accurate reporting.
The IRS also offers guidance on how to figure out the cost of goods sold.
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Example of COGS
Product manufacturers have a somewhat complex equation for COGS. They need to account for raw materials, components that come from multiple suppliers, and storage. These all factor in to your cost of goods sold:
Raw materials
Labor
Shipping costs
Warehouse overhead
Product packaging and labeling
Let’s say a manufacturing company is building widgets that cost $500 to build: $100 in raw materials, $100 in labor, $100 in shipping costs, and $200 in other direct costs. They make 40 to kickstart each quarter.
Calculating COGS can be a headache, especially if you’re producing your own goods. If you’d rather not rely on your own math skills, here’s a COGS calculator to help you get started.
If you create your own products, you’ll need to create a spreadsheet to track the cost of raw materials and direct costs. Think of every marketing activity that it took to get sales leads, and make sure that’s factored in.
You’ll also need to define what time period you want to cover, whether america phone number list it’s monthly, quarterly, or annually. The longer the time frame, the more accurate your COGS will be. However you calculate cost of goods sold, it’s important to track all of your sales data in a CRM to ensure accurate reporting.
The IRS also offers guidance on how to figure out the cost of goods sold.
Get articles selected just for you, in your inbox
Sign up now
Example of COGS
Product manufacturers have a somewhat complex equation for COGS. They need to account for raw materials, components that come from multiple suppliers, and storage. These all factor in to your cost of goods sold:
Raw materials
Labor
Shipping costs
Warehouse overhead
Product packaging and labeling
Let’s say a manufacturing company is building widgets that cost $500 to build: $100 in raw materials, $100 in labor, $100 in shipping costs, and $200 in other direct costs. They make 40 to kickstart each quarter.