![]() It’s directly linked to a company’s revenues and has a major effect on profit margins. Understanding COGS provides valuable insights into a company’s efficiency and helps in strategic planning.Different inventory cost methods like FIFO and LIFO can be used in the calculation. COGS can be calculated using the formula: Cost of Goods Sold = Beginning Inventory + Purchases During the Period – Ending Inventory.Calculating COGS is critical for setting prices, managing business budgets, and determining profitability. ![]()
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