One relatively simple way to determine the cost of goods sold is to compare inventory at the start and end of a given period using the formula: COGS = Beginning Inventory + Additional Inventory – Ending Inventory.

Is it better to have a higher or lower COGS?

The calculation of COGS has a direct impact on your tax situation. Cost of Goods Sold is considered an expense, therefore the larger it is, the lower your taxable income.

What is a good percentage of cost of goods sold?

What should COGS be for a restaurant? The Food Service Warehouse recommends your restaurant cost of goods sold (COGS) shouldn’t be more than 31% of your sales .