Compute cost of goods sold for each of these two companies for the year ended December 31, 2011.
Century Merchandising New Homes Manufacturing
Beginning inventory Merchandise $250,000 Finished goods $500,000
Cost of purchases 460,000 Cost of goods manufactured 886,000
Ending inventory Merchandise 150,000 Finished goods 144,000
Cost of Goods Sold (COGS)
The total cost of the goods that are sold by the company is called the cost of goods sold. The cost of goods sold when reduced from the sale value gives the profit earned by the company. The cost of goods sold does not include the value of the ending inventory as it is not included in the sales.