What is the formula for calculating percentage of COGS and actual COGS

COGS = Cost of Goods Sold

COGS is always measure to Net Sales

upper Line

Sales - COGS = GM

COGS ÷ Sales = % of COGS To Sales

COGS ÷ Invntory = To Actual COGS

Quote:

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Originally Posted by bishara

COGS = Cost of Goods Sold

COGS is always measure to Net Sales

upper Line

Sales - COGS = GM

COGS ÷ Sales = % of COGS To Sales

COGS ÷ Invntory = To Actual COGS

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Interesting!! Can u explain the last item about actual cogs?

Quote:

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Originally Posted by rehmanvohra

Interesting!!! Can u explain the last item about actual cogs?

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Yeah, I'd like to know that too.

teegee, I'm assuming by "actual COGS" you mean the dollar amount of it. That is the company's cost of everything they sold. The difference between cost and sales price is the gross profit (gross margin).

How you might calculate will depend on the information that has been given to you. If you were using a perpetual inventory system, you wouldn't have to calculate it at all because that amount would already be in the COGS account.

If you're using periodic system then its:
Beginning Balance of Inventory
+ Net Purchases
= Available for Sale
- Ending Inventory
= Cost of Goods Sold

If, however, you have been given some random information for some specific problem, it would depend on the info you have been given and no one can answer that without having that info.

If you want to know what percent something is of something else, you always divide the first by the second. Keep in mind that any "rate" is a percentage, so works the same way if they call it a rate.

That is, if you want COGS as a percentage of sales, divide in that order: COGS/sales.

If you want gross profit as a percentage of sales, divide in that order: GP/sales.

If you want how many males are in your class out of the total, divide in that order: males/total students.

This always works. If you remember how to do the math behind it, you can use it for any time, any topic, any subject, when you want to know what percentage something is.

As far as I can recollect, dividing cost of goods sold with inventory gives the inventory turnover and NOT the actual cost of goods sold. It is for this reason I requested Bishara for explanation.