What is Cost of goods sold?

COGS is defined as the direct costs of producing the goods sold by a company. This amount includes the cost of the materials and labor directly used to create the good. It excludes indirect expenses, such as distribution costs and sales force costs.

The cost of goods sold includes the cost of all the raw ingredients used in producing a particular food product. For an inventory management system, the food costs play a great role.

You can calculate COGS by using the following formula

Beginning Inventory + Purchased Inventory - Ending Inventory

Whether you own a restaurant chain or a small cafe, tracking and maintaining your inventory is equally important. If you are looking for more ideas to increase your restaurant revenues, follow this page.