How Cost of Goods sale calculated?

Hi Naomi5 

Thanks for your questions, we know how important is to get your inventory right, and sometimes planning a bit ahead make its implementation much easier.

Standard cost (in Accountright) or Buying Price (in MYOB Business), is the price that will appears on a purchase order or bill when you are keying that product/item. More info here. Note: you can overide that price on the purchase order/bill if needed.

We using Accountright or MYOB Business (perpetual inventory system) your inventory's monetary value is tracked using the average costing method, using the formula: average Cost = Total Value of the item ÷ Total Quantity of items. The example below explains how the average cost and total value of a bottle of beer was calculated overtime

Purchase 10 x beer @ $2
Total Value: $20
Average Cost : $2 (= $20 / 10 units)

Purchase 10 x beer @ $3
Total Value: $30

Average Cost : $2,50 (= $50 / 20 units)

More information about on hand value and average cost here. 

If you buy items overseas, we recommend calculating its landed cost (the total cost of an imported shipment ie the purcahse price of the item + freight + insurance etc). This article here explains how to accurately calculate landed cost.

COGS will be automatically calculated when the item is sold, as far as your item has both "I track stock for this item" and "Sell this item" ticked (we you have accurately record the item's buying price).

Finally, if your average cost is incorrect for some reason, we recommend using the adjust inventory feature to correct your figures (please seek advise with an accountant if you are unsure on how to balance your stock value). You can find some more information here.

Regards,

Bruno and the Inventory team