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Cost of Goods Purchased Formula:
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Cost of Goods Purchased (COGP) represents the net cost of merchandise acquired for resale during a specific period. It includes the purchase price plus any freight costs, minus any purchase returns or allowances.
The calculator uses the COGP formula:
Where:
Explanation: This calculation determines the actual cost of inventory available for sale after accounting for all acquisition costs and adjustments.
Details: Accurate COGP calculation is essential for inventory valuation, cost of goods sold determination, gross profit analysis, and financial statement preparation. It helps businesses understand their true acquisition costs and make informed purchasing decisions.
Tips: Enter all amounts in the same currency unit. Purchases and freight should be positive values, while returns represent deductions. Ensure all values are accurate and reflect the same accounting period.
Q1: What's the difference between COGP and COGS?
A: COGP represents the cost of goods purchased during a period, while COGS (Cost of Goods Sold) represents the cost of goods actually sold during that period. COGS = Beginning Inventory + COGP - Ending Inventory.
Q2: Should freight-in be included in COGP?
A: Yes, freight-in (transportation costs to bring goods to your location) should be included as it's part of the acquisition cost.
Q3: How do purchase discounts affect COGP?
A: Purchase discounts reduce the cost of purchases and should be deducted from the purchases amount before calculating COGP.
Q4: What currency should I use?
A: Use your business's functional currency. All inputs must be in the same currency for accurate calculation.
Q5: How often should COGP be calculated?
A: COGP should be calculated for each accounting period (monthly, quarterly, or annually) to support inventory management and financial reporting.