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Cost of goods sold computation?

Hi guys,

I'd like to ask for the formula for computing cost of goods sold for accounting purposes. I would also like to know how indirect materials are treated (ie. the bottle for bottled water, the wrapper of a hamburger, the cup and straw of a drink).

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  • Anonymous
    1 decade ago
    Favorite Answer

    Sales--------------------------------- $100,000

    Cost of Goods Sold

    Inventory 01/01/03-- $ 5,000

    Purchases------------ 45,000

    Direct Labor--------- 30,000

    _______

    80,000

    Less: Inventory 12/31/03----- 10,000

    _______

    Net Cost of Goods Sold---------------- 70,000

    ______

    Gross Profit on Sales------------------ $30,000

    Also look on Google or Wickipedia...Just enter in search box "Cost of goods sold" There are loads of examples and explainations..............Good luck

    Source(s): Wikipedia
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  • 1 decade ago

    Indirect cost (indirect material, indirect labour & other manufacturing overhead) is accumulated as Overhead/ Manufacturing overhead. They're applied to the production cost using a systematic calculated estimation. This is however is for management accounting purposes. For GAAP, these cost are charged as & when they're incurred as period cost (in P&L).

    Cheers...

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