How to calculate cogs?

791 views 2 replies

Earlier we could simply calculate COGS by taking Opening Stock + Purchases - Closing Stock

But the format of the income statement has changed. Now it shows cost of materials consumed and Changes in inventories of work-in-progress, stock-in-trade and finished goods. I find the new format confusing and difficult to interpret. Could someone please explain what these line items mean with an example?

Replies (2)
cost of materials consumed would be the purchases in most of the cases and change in inventory simple means "opening stock minus closing stock".

What is you said is actually correct, and they are doing the same thing....but just in a different format
COGS = Op Stock +Pur -Clo Stock
or
COGS = Pur +Op Stock-Clo Stock

Since Op Stock-Clo Stock =Change In inventory.

therefore COGS = Pur + Change in Inventory.


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