Joint Costs and the Split-Off Point, Explained: How Makers Allocate Shared Production Costs
Joint costs split at the split-off point by physical units, sales value, or NRV — but sell-or-process-further decisions must use incremental dollars only.
#cost-of-goods-sold
Cost of Goods Sold
Learn how to calculate and track cost of goods sold for inventory valuation
LIFO Reserve and LIFO Liquidation, Explained: The Footnote That Restates LIFO Inventory to FIFO
The LIFO reserve is FIFO inventory minus LIFO inventory; liquidating old layers books phantom profit that Section 472 still taxes in full.
Bill of Materials (BOM), Explained: Single-Level vs. Multilevel BOMs, Engineering vs. Manufacturing BOMs, and How an Accurate BOM Drives Costing, Purchasing, and Inventory Control
Your BOM sets your product cost, purchasing plan, and inventory relief — a stale one silently eats margin. Single-level vs. multilevel, EBOM vs. MBOM.
Perpetual vs. Periodic Inventory: When Real-Time Tracking Beats Count-and-Calculate
Perpetual inventory updates stock and COGS with every sale; periodic backs COGS out of a physical count — pick by SKU count, volume, and margin.
ABC Inventory Analysis: How Ranking Every SKU by Annual Value Tells You What to Count Weekly, What to Reorder Automatically, and What to Stop Stocking
ABC analysis ranks every SKU by annual consumption value, so A items earn weekly counts and lean stock while the C tail coasts on bulk autopilot.
Underapplied and Overapplied Overhead, Explained: Close the Variance to COGS or Prorate It Across Inventory
Underapplied overhead means actual spending beat applied overhead — close a small variance to COGS, prorate a material one across WIP, finished goods, and COGS.
FOB Shipping Point vs. Destination: Who Owns Goods in Transit, Who Pays Freight, and How the Answer Lands Year-End Sales in the Right Year
FOB shipping point transfers ownership at the seller's dock; FOB destination, at the buyer's — and the term decides revenue timing, freight, and cutoff.
Gross vs. Net Method for Recording Purchases: How Cash Discounts Change Your Payables and COGS
The gross method books purchases at full invoice price; the net method books them minus the discount and flags misses as Purchase Discounts Lost expense.
Period Costs vs. Product Costs: What Goes Into Inventory and What Hits Your Profit and Loss Right Away
Product costs ride with inventory onto COGS at sale; period costs hit profit now — misclassifying either shifts profit between months.
What Is Cost of Goods Sold (COGS) and Why It Decides Your True Margin
COGS is the direct cost of what you sold — materials, labor, freight. Revenue minus COGS is gross profit, the verdict on whether your pricing works.
Cost of Goods Sold Explained: What Belongs in COGS, How Inventory Decides Your Gross Profit, and Why Misclassified Labor Lies About Your Margin
COGS is beginning inventory plus purchases and direct labor minus ending inventory — under IRS rules a $5,000 miscount moves gross profit $5,000.
FIFO vs. LIFO: How Your Inventory Method Changes Your Tax Bill When Prices Rise
LIFO matches newest costs against sales, cutting taxable income while prices rise — but the IRS locks in the election and taxes the reserve when you leave.