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Dear Sir,
What is the difference among Cost of good sold, Cost of Purchase and Cost of Sales?Thank you so much!!!
Cost of purchases is the cost of what is bought during the period.
Cost of sales and cost of goods sold are the same thing – the cost of what is sold during the period (which is the opening inventory plus the purchases less the closing inventory).
Do watch my free lectures. They are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
Thank you John! How about Cost of production?
Cost of Sale (Cost of Good Sold) = Cost of Production + Cost of distribution + Cost of advertising….
Am I correct?
No,Cost of production includes all direct expenses and production overheads which includes
Energy,Fuel,Wages of factory supervisor and workers,plant depreciation, carriage inward and many more.Conclusion: Cost of production is all included in COS/COGS of a manufacturing firm.
Soarav: Please do not answer in the forum because it is the Ask the Tutor Forum and you are not the tutor (but please do help people in the other Paper FA forum).
Thuyly: You are wrong for two reasons.
Firstly, as I wrote before, the cost of sales = cost of production + opening inventory – closing inventory.Secondly, the cost of production is the total of all costs in the factory of producing the goods, which is the cost of the materials plus all other costs in the factory such as those listed by Soarav. Distribution costs and advertising costs are not costs of production.
Again, this is all explained in my free lectures!
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