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How to calculate cogs
Find out the average cost of purchased inventory.
Average cost is not only an acceptable reporting method but also can be a helpful way to think about the products in your inventory over a longer scale of time. Add all inventory purchase prices for a single product type together and divide by the number of products purchased to get the average cost.
For example, $1.00 + $1.50/2 = $1.25 average cost. Find out the average cost of the goods you produced.