#cost-of-goods-sold
Learn how to calculate and track cost of goods sold for inventory valuation
FIFO maximizes reported profit when costs rise, LIFO minimizes tax, average cost splits the difference — choose by cash flow, borrowing plans, and IRS rules.
Freight-in is part of inventory cost and becomes COGS when goods sell; freight-out is a selling expense. Mixing them distorts gross margin and tax.
COGS equals beginning inventory plus purchases minus ending inventory — two careful counts decide your gross profit, pricing, and tax.
Shopify labels bill separately from payouts — split each invoice, book postage to COGS, and remit sales tax collected on shipping.
Etsy fees are not COGS — they are Schedule C selling expenses. Track materials, labor, fees, and shipping per listing to price for real profit.
Self-hosting beats LLM APIs past ~$20K/mo in API spend, then the cluster becomes a 5-year asset with Section 179 or bonus depreciation.
Contribution margin per unit is revenue minus variable cost — slice it by product, channel, and customer to see which slices earn their keep.
Inventory turnover is COGS divided by average inventory — apparel typically turns 4 to 6 times a year. Track it quarterly to spot dead stock and free cash.
Target cost equals market price minus required profit — set the price first, then engineer costs down to fit before you launch.
CAPE Phase 3 opened October 6 for IEEPA refunds on finally liquidated entries; U.S. importers face 10-12.5% Section 301 duties and wider Section 232 tariffs.
Amazon now reimburses lost FBA inventory at manufacturing cost, not retail price — file within 60 days with supplier invoices to recover what you are owed.
US tariffs added about $5 to every blank garment. Bill setup fees separately, amortize digitizing files across units, and reprice quotes from landed cost.
