Recent Articles

What is the definition of Cost of Goods Sold?

An article describing the basic elemets of the ‘Cost of Goods Sold’ section of a Profit and Loss statement. It provides examples of some simple formats and explains the basic terminology used for this area of the Profit and Loss Statement. A good artilce for the new entrepreneur to learn about how Cost of Goods Sold is defined.

Definition of Contribution Margin


Contribution margin is a core business concept and is often used in cost accounting to identify the amount of financial contribution a sold product provides to the company.  Simply put, contribution margin is the sales price less the direct costs [...]

How is Cost of Goods Sold in Retail Determined?


Each industry is different in determining costs of goods sold or cost of services rendered.  Retail uses two distinct methods to calculate costs of goods sold.  The first is called ‘Specific Identification’ whereby each item sold is [...]

An Explanation of Inventory Turnover


A relationship exists between inventory and sales.  This is referred to as ‘Inventory Turnover’ or ‘Turnover Ratio’.  It is simply the number of days it takes to turn over the dollar value of the inventory.  This relationship is important [...]

What is ‘Cost of Goods Sold’?


Simply put, ‘cost of goods sold’ equals the direct costs of materials, human resources, and equipment needed to produce the item sold.  However, this can be confusing because there are many marginal cost items that affect the real cost of [...]

What is the Difference between Markup and Margin?


Mark Up Calculator It is amazing how one simple formula can be so confusing to the average business owner.  The formula is markup.  It is defined as the dollar amount or percentage of the cost of the item added to the item to equal its sales [...]