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Accounting Cost of Goods Sold (Monthly) Calculator

Calculate your monthly cost of goods sold from opening inventory, purchases, purchase returns, freight-in and closing inventory.

Your Details

Overview

Use this monthly cost of goods sold calculator to estimate the direct cost of inventory sold in a period. Enter opening and closing inventory, purchases, purchase returns, and direct inventory buying costs; add sales revenue if you also want to review gross profit and gross margin.

How it works

Cost of goods sold starts with opening inventory, then adds net purchases and direct costs of bringing inventory to your business. This gives goods available for sale. Subtracting the inventory still on hand at month-end produces cost of goods sold. Gross profit equals sales revenue less cost of goods sold, and gross margin expresses that profit as a percentage of revenue.

How to use this calculator

  1. 1Enter the inventory value at the start of the month.
  2. 2Add all inventory purchases made during the month.
  3. 3Subtract supplier returns and purchase allowances.
  4. 4Include freight-in and other direct inventory acquisition costs.
  5. 5Enter the ending inventory value and monthly net sales revenue.
  6. 6Review the estimated cost of goods sold, gross profit, and gross margin.

Example Calculation

Opening inventory

$10,000

Inventory purchases

$25,000

Purchase returns and allowances

$1,000

Freight-in and direct buying costs

$500

Closing inventory

$12,000

Monthly sales revenue

$40,000

Monthly cost of goods sold

$22,500

Net purchases are $24,000 and goods available for sale are $34,500. After subtracting $12,000 of closing inventory, monthly cost of goods sold is $22,500. With $40,000 in sales revenue, gross profit is $17,500 and gross margin is 43.8%.

Frequently asked questions

What is the formula for monthly cost of goods sold?

Monthly cost of goods sold equals opening inventory plus net purchases plus freight-in and other direct buying costs, minus closing inventory.

Should shipping costs be included in cost of goods sold?

Freight-in and other direct costs needed to acquire inventory are commonly included in inventory cost. Shipping charged to customers is generally treated separately.

Are purchase returns included in COGS?

Purchase returns and allowances reduce the cost of purchases, so they are subtracted before calculating goods available for sale.

Why is closing inventory subtracted from COGS?

Closing inventory has not been sold during the month. Subtracting it leaves the cost assigned to inventory that was sold.

What is the difference between COGS and operating expenses?

COGS covers direct inventory costs tied to items sold. Operating expenses include costs such as rent, administration, marketing, and many payroll costs.

Can a service business use this calculator?

It is most suitable for businesses that buy, make, or resell inventory. A service business may instead track direct service delivery costs, depending on its accounting approach.

Explore Related Calculators

Accounting Cost of Goods Sold (Annual) CalculatorCalculate annual cost of goods sold using opening inventory, inventory purchases, direct costs and closing inventory.Calculate →Accounting Cost of Goods Sold (Per-Unit) CalculatorCalculate cost of goods sold per unit and total COGS using the weighted-average inventory method.Calculate →Accounting EBITDA CalculatorCalculate EBITDA by adding interest, taxes, depreciation, and amortization back to net income.Calculate →Accounting EBITDA (Monthly) CalculatorCalculate estimated monthly EBITDA, EBITDA margin, gross profit and EBIT from revenue, operating costs and non-cash expenses.Calculate →

Assumptions and warnings

Assumptions

  • All amounts relate to the same monthly accounting period.
  • Inventory values use a consistent valuation method, such as FIFO, weighted average, or specific identification.
  • Freight-in and direct buying costs are included in inventory cost where applicable.
  • Sales revenue is net of sales returns, discounts, and allowances if you want the gross margin result to reflect net sales.
  • Results are estimates based on the figures entered and do not include operating expenses, taxes, or financing costs.

Warnings

  • This calculator provides an accounting estimate only and is not financial, tax, or professional accounting advice.
  • Inventory valuation rules and cost capitalization requirements can vary by business, jurisdiction, and accounting framework.
Monthly Cost of Goods Sold Calculator