The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies

URL:  http://boards.fool.com/correct-me-if-im-wrong-but-i-believe-if-a-30269058.aspx

Subject:  Re: COGS Date:  9/18/2012  11:58 AM
Author:  Wradical Number:  116600 of 121572

Correct me if I'm wrong, but I believe if a person has a small manufacturing business, but doesn't keep inventory - basically buys material, makes a product, sells it all pretty much at the same time for each order placed, they don't have to deal with Cost Of Goods Sold, do they? They can simply expense the materials they buy.
==============================
"But doesn't keep inventory?" - That means that on New Year's Eve, as the crystal ball is falling in Times Square, there is no raw material sitting in the shop, and there are no half-finished jobs in process. If that's true then you don't have to keep track of inventory. (And work-in-process includes labor, and an overhead component, too.)

And if you do just expense the materials you buy, that, and your labor and related costs, are still Cost of Goods Sold. You just aren't adjusting for inventory changes.

And if you're running a manufacturing business of any kind, you really should be working with an accountant, and talk to him/her about this.

Bill
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us