Accounting Cost of Goods Sold (Monthly) Calculator Examples
Explore worked monthly COGS examples for retailers, wholesalers, and inventory-based businesses with different inventory movements.
These worked examples show how opening inventory, net purchases, direct buying costs, and closing inventory combine to produce monthly COGS. Each example also shows how COGS changes gross profit and gross margin when net sales are included.
Small online retailer with moderate inventory growth
Online retailer monthly COGS example
Input Summary
Opening inventory
$4,000
Purchases
$9,000
Purchase returns
$300
Freight-in
$200
Closing inventory
$5,100
Net sales revenue
$15,000
Calculation Breakdown
- 1Net purchases$9,000 − $300$8,700
- 2Goods available for sale$4,000 + $8,700 + $200$12,900
- 3COGS$12,900 − $5,100$7,800
- 4Gross profit$15,000 − $7,800$7,200
- 5Gross margin($7,200 ÷ $15,000) × 10048.0%
Result Summary
Gross margin
48.0%
Accounting Cost of Goods Sold (Monthly) Calculator
Monthly COGS is $7,800, gross profit is $7,200, and gross margin is 48.0%.
Wholesale business with lower ending inventory
Wholesale inventory drawdown example
Input Summary
Opening inventory
$30,000
Purchases
$45,000
Purchase returns
$2,000
Freight-in
$1,500
Closing inventory
$18,500
Net sales revenue
$100,000
Calculation Breakdown
- 1Net purchases$45,000 − $2,000$43,000
- 2Goods available for sale$30,000 + $43,000 + $1,500$74,500
- 3COGS$74,500 − $18,500$56,000
- 4Gross profit$100,000 − $56,000$44,000
- 5Gross margin($44,000 ÷ $100,000) × 10044.0%
Result Summary
Gross margin
44.0%
Accounting Cost of Goods Sold (Monthly) Calculator
Monthly COGS is $56,000, leaving gross profit of $44,000 and a 44.0% gross margin.
Specialty store with substantial supplier returns
Purchase returns and allowances COGS example
Input Summary
Opening inventory
$12,000
Purchases
$20,000
Purchase returns
$4,000
Freight-in
$600
Closing inventory
$10,600
Net sales revenue
$32,000
Calculation Breakdown
- 1Net purchases$20,000 − $4,000$16,000
- 2Goods available for sale$12,000 + $16,000 + $600$28,600
- 3COGS$28,600 − $10,600$18,000
- 4Gross profit$32,000 − $18,000$14,000
- 5Gross margin($14,000 ÷ $32,000) × 10043.8%
Result Summary
Gross margin
43.8%
Accounting Cost of Goods Sold (Monthly) Calculator
Monthly COGS is $18,000, gross profit is $14,000, and gross margin is 43.8%.
Growing retailer with large inbound freight costs
Freight-in included in monthly inventory cost example
Input Summary
Opening inventory
$18,000
Purchases
$52,000
Purchase returns
$1,000
Freight-in
$4,000
Closing inventory
$25,000
Net sales revenue
$90,000
Calculation Breakdown
- 1Net purchases$52,000 − $1,000$51,000
- 2Goods available for sale$18,000 + $51,000 + $4,000$73,000
- 3COGS$73,000 − $25,000$48,000
- 4Gross profit$90,000 − $48,000$42,000
- 5Gross margin($42,000 ÷ $90,000) × 10046.7%
Result Summary
Gross margin
46.7%
Accounting Cost of Goods Sold (Monthly) Calculator
Monthly COGS is $48,000, producing gross profit of $42,000 and gross margin of 46.7%.
How to Read Your Results
COGS estimates the direct cost of inventory sold, not the business's total monthly expenses.
Goods available for sale shows the total cost pool before closing inventory is removed.
Gross profit is the amount remaining after COGS and before operating expenses, interest, and taxes.
Gross margin makes it easier to compare months or product mixes of different sales sizes.
Review changes in closing inventory before interpreting a month-to-month change in COGS or margin.
Assumptions & Important Notes
- Each example uses a single month and a consistent inventory valuation basis.
- Sales revenue is treated as net sales for the gross margin calculation.
- Freight-in is treated as a direct inventory acquisition cost in the examples.
- Operating expenses, taxes, and financing costs are excluded.
Related Examples
Frequently Asked Questions
What figures do I need for a monthly COGS example?
You need opening inventory, purchases, purchase returns or allowances, direct buying costs such as freight-in where applicable, and closing inventory. Add net sales to calculate gross profit and margin.
Why can COGS increase when purchases fall?
COGS may increase if the business sells inventory that was already on hand and closing inventory declines by enough to offset lower purchases.
Do all businesses add freight-in to COGS?
Freight-in may be included when it is a direct cost of acquiring inventory. Treatment can vary based on the facts and accounting approach used.
Does gross profit include rent and payroll?
No. Gross profit in these examples is sales revenue minus COGS. General operating costs are not deducted.
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