UK Accounting Glossary
Materials, labour and other costs directly related to the goods or services provided.
Figuring out the Cost of Goods Sold on a per-item basis is a tedious and unnecessary process. In most cases, goods or products enter the Inventory at varying times and at varying costs. There are changes in the cost of raw materials, labour, transport, etc, from period to period and from time to time. It will be very difficult to be accurate even with the aid of a computer.
To the beginning Inventory of a period (which is the ending Inventory of the previous period), the value of Purchases during the same period is added. From the result is subtracted the ending Inventory of the period. The final result is the Cost of Goods Sold corresponding to the Sales during the period.
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This glossary post was last updated: 23rd December 2018.