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Cost of Goods Purchased Formula:
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Cost of Goods Purchased (COGP) represents the total cost incurred to acquire inventory during a specific accounting period. It includes the purchase price plus any additional costs necessary to bring the goods to their current condition and location for sale.
The calculator uses the COGP formula:
Where:
Explanation: This calculation helps determine the net cost of inventory actually available for sale after accounting for all adjustments.
Details: Accurate COGP calculation is essential for determining inventory valuation, calculating cost of goods sold, preparing financial statements, and analyzing gross profit margins.
Tips: Enter all values in the same currency unit. Purchases and freight are added, while returns and discounts are subtracted. All values must be non-negative numbers.
Q1: What's the difference between COGP and COGS?
A: COGP represents the cost of inventory purchased, while COGS (Cost of Goods Sold) represents the cost of inventory actually sold during the period.
Q2: Are freight costs always included in COGP?
A: Yes, freight-in costs (costs to bring inventory to your location) are included in COGP, while freight-out costs (shipping to customers) are operating expenses.
Q3: How do purchase returns affect COGP?
A: Purchase returns reduce COGP because they represent inventory that was returned to suppliers and is no longer available for sale.
Q4: What types of discounts are subtracted?
A: Trade discounts and purchase discounts received from suppliers are subtracted from the purchase cost.
Q5: How is COGP used in inventory accounting?
A: COGP is added to beginning inventory to determine goods available for sale, from which ending inventory is subtracted to calculate COGS.