ECONOMICS

Detailed explanation-1: -What is the finished goods inventory formula? The finished goods inventory formula (finished goods inventory = beginning finished goods + cost of manufactured goods-COGS) refers to the calculation businesses use to determine how many inventory items are ready for sale.

Detailed explanation-2: -The first step to calculating beginning inventory is to figure out the cost of goods sold (COGS). Next, add the value of the most recent ending inventory and then subtract the money spent on new inventory purchases. The formula is (COGS + ending inventory) – purchases.

Detailed explanation-3: -At a basic level, the cost of goods sold formula is: Starting inventory + purchases − ending inventory = cost of goods sold.

Detailed explanation-4: -COGS = Beginning Finished Goods Inventory + Cost of Goods Manufactured – Ending Finished Goods Inventory.

Detailed explanation-5: -In order to calculate COGM, just add the Beginning WIP Inventory to the Total Manufacturing Cost, and subtract the Ending WIP Inventory. This will give you the total cost of the goods that were finished during the specified period. Read more about Work in Process Inventory Accounting.