what is the cost of goods sold?
Cost of Goods Sold is the cost of goods produced and sold, including raw material costs, purchase costs. Direct labor, and overhead costs. Do not include periods (operations) costs such as sales, advertising or electricity. Water and development.
the definition of HPP is all costs incurred to obtain goods to be resold.
By calculating the HPP, the Company can decide the price of the item to be sold
Small Illustration:
Ardi bought 1 unit of Cellphone in an online store worth 2,000,000 and was charged shipping rates and an administration fee of 300,000. The cellphone will be resold by Ardi by earning 200,000 profits.
What is the price of the Cellphone that Ardi bought?
and how much Ardi determines the price of the Cellphone that will be sold to get a profit of 200,000?
If Ardi sells the Cellphone at a price of 2,200,000. Ardi suffered a loss of 100,000
because the price of the actual Handphone bought by Ardi at the Online store is worth 2,300,000
From the Small illustration above, Ardi only calculates the price of the item, without calculating the acquisition price or cost of goods sold.
The cost of goods sold will be a report on the profit and loss of each operating cost and also the cost of sales. Cost of Goods Sold is usually only experienced by trading companies that have the purpose of trading merchandise. While each sale of merchandise must have a purchase value that has been sold. Several ways on how to calculate HPP, including:
1. Initial Inventory of Merchandise
The initial availability of merchandise available at the beginning of the period or the current accounting year. The balance of the initial inventory of merchandise is in the current account balance or the company's initial balance sheet or the previous year's balance sheet.
2. End Inventory of Merchandise
The final inventory of merchandise becomes a merchandise inventory available at the end of the period or the end of the current financial year. This inventory balance can usually be found in the company adjustment data at the end of the period.
3. Net Purchases
Net purchases are all purchases of merchandise carried out by the company, either purchasing merchandise in cash or purchasing goods on credit, plus the cost of transporting the purchase and deducting the purchase discount and the purchase returns that occur.
How to Calculate Cost of Goods Sold
in calculating Cost of Goods Sold including transportation costs, purchase returns, purchase discounts, and so forth. If there are no transportation costs, purchase returns, purchase discounts, etc., the Cost of Goods Sold can still be calculated.
Following are the Formulas for calculating Cost of Goods Sold:
HPP = Goods available for sale - End inventory
Information :
Available for sale items = (Initial Merchandise Inventory + Net purchase.)
Clean supervision = (Purchase + purchase costs) - (Purchase Returns + Purchase Pieces)
Another way to calculate Cost of Goods Sold:
1. initial merchandise inventory (+)
2. purchase of merchandise (+)
3. purchase load (+)
4. purchase returns and price reductions (-)
5. purchase discount (-)
6. final merchandise inventory (-)
Example of Cost of Goods Sold
UD. JAYA, Surabaya as of December 31, 2017.
* Inventory of merchandise (initial) worth Rp. 25,000,000
* Purchases worth IDR 15,000,000
* Purchase returns worth IDR 3,000,000
* IDR 1,000,000 purchase discount
* Transportation cost of Rp 2,000,000
On December 31, when doing Stock Check, it was known that the remaining inventory of merchandise was worth Rp. 7,000,000
Calculate UDP UD. JAYA:
Merchandise inventory (initial) Rp. 25,000,000 (+)
Purchase IDR 15,000,000 (+)
Purchase return of IDR 3,000,000 (-)
Rp 1,000,000 (-) purchase discount
Transportation fee of Rp 2,000,000 (+)
Merchandise inventory (end) Rp. 7,000,000 (-)
Cost of Goods Sold Rp.31,000,000
With the cost of goods sold, it can be an accurate financial report and can be accounted for.
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