COGS. An income statement figure which reflects the cost of obtaining raw materials and producing finished goods that are sold to consumers. Cost of Goods Sold = Beginning Merchandise Inventory + Net Purchases of Merchandise - Ending Merchandise Inventory.For example:Beginning Merchandise Inventory = $150,000Net Purchases of Merchandise = $400,000Ending Merchandise Inventory = $125,000COGS = 150,000 + 400,000 - 125,000 = $425,000.In standard accounting practices, gross margin can be calculated by subtracting the cost of goods sold from total sales.
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