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When we subtract Gross Profit from sales... What we get?? Cost of Goods Sold or Cost of Production?? I get confused in the two..
Answers (6)
Ravikumar Pandi
Cost of production = costs spent for production (Material + labour + overhead) Cost of Goods Sold = Cost of production + Opening WIP - Closing WIP + Opening FG - Closing FG
Cost of Goods Sold contains value of all the spent cost and also value of the closing stock costs. Therefore Cost of Goods Sold + Margin (Gross Profit) = Sales Value
Ravikumar Pandi
Cost of Goods Sold contains value of all the spent cost and also value of the closing stock costs. Therefore Cost of Goods Sold + Margin (Gross Profit) = Sales Value
(Sorry I'm not mentioned the words, i.e. not contained) Corrected: and also *not contained* value of the closing stock cost.
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