how do you calculate cost of goods sold cogs 
cost of goods sold cogs is calculated by adding up the various direct costs required to generate a company s revenues importantly cogs is based only on the costs that are directly utilized in producing that revenue such as the company s inventory or labor costs that can be attributed to specific sales by contrast fixed costs such as managerial salaries rent and utilities are not included in cogs inventory is a particularly important component of cogs and accounting rules permit several different approaches for how to include it in the calculation 