Cost of goods sold is the total cost of the Item (merchandise) that was sold to customers.
Inventory are Items (merchandise) created (purchased) by manufacturers, retailers, wholesalers, or distributors for the purpose of being sold to customers.
Cost of Goods Example: (Use this link for more detailed information on Cost of Goods and Profit and Loss)
|Soap Beginning Inventory||0|
|Total Soaps Made in 2016||175|
|Total Soap Making Supplies Purchased in 2016||$1,500.00|
|Total Cost||Total Inventory||Cost per Item|
|$1,500.00||/ 175||= $8.57|
The $8.57 is how much each Soap (Item) cost in raw materials to produce, otherwise known as the Cost of Goods (CoG)
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