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The formula for calculating Cost of Sales is Opening Stock + Purchases – Closing Stock.
However, my doubt is wont the COS include the Direct Labour and Overhead costs too, but is not included in the formula?
You’re absolutely correct – but for the purposes of paper F7 / Financial Reporting probably the most difficult calculation is “opening stock + purchases – closing stock”
If we were looking at papers F2 or F5, we woud also be considering the effect on cost of sales of these allocated overheads … but not for F7
OK?
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