关于【Money Management】问题列表
共39个加密货币问题
Electricity Utility Bills: What’s Normal and How to Budget It
As a homeowner in the U.S., I’m trying to budget for my monthly expenses, but I’m confused about what counts as a utility bill. Are we talking just about electricity, or do other services like water or internet count too? I’ve heard terms like electricity utility bill, home utility bills, and common utility bills, but I’m not sure what’s included or how much these typically cost. I’m also curious about how prices vary by state or household size—say, for a family of four.
My goal is to get a clear picture of these expenses to manage my finances better, especially since I’m exploring ways to save, like investing extra cash in Bitcoin or cryptocurrency for long-term gains. Can someone break down what utility bills are and give me a ballpark figure for their costs?
Managing home utility bills is a big part of household budgeting, especially with rising energy costs. I want to understand how much an electricity utility bill might be for an average home and what other common utility bills I should expect. If I can cut costs here, I might have more to invest in platforms like Binance or BYDFi for cryptocurrency trading. Any tips for keeping these bills low would be a bonus!
Electricity Utility Bills: What’s Normal and How to Budget It
As a homeowner in the U.S., I’m trying to budget for my monthly expenses, but I’m confused about what counts as a utility bill. Are we talking just about electricity, or do other services like water or internet count too? I’ve heard terms like electricity utility bill, home utility bills, and common utility bills, but I’m not sure what’s included or how much these typically cost. I’m also curious about how prices vary by state or household size—say, for a family of four.
My goal is to get a clear picture of these expenses to manage my finances better, especially since I’m exploring ways to save, like investing extra cash in Bitcoin or cryptocurrency for long-term gains. Can someone break down what utility bills are and give me a ballpark figure for their costs?
Managing home utility bills is a big part of household budgeting, especially with rising energy costs. I want to understand how much an electricity utility bill might be for an average home and what other common utility bills I should expect. If I can cut costs here, I might have more to invest in platforms like Binance or BYDFi for cryptocurrency trading. Any tips for keeping these bills low would be a bonus!
DigitalStellaris · 2025-07-18 · a month ago1 1158What Is Mortgage Protection and How Does Mortgage Term Insurance Work?
I’m trying to understand what exactly mortgage protection means, especially terms like mortgage term insurance and home mortgage protection. I live in the U.S. and recently took out a mortgage, so I want to make sure my family won’t lose the house if something happens to me. I’ve also heard about term insurance for mortgage but I’m not sure how it differs from regular life insurance or if it’s worth the cost. Can someone explain how mortgage protection works and why it might be important?
What Is Mortgage Protection and How Does Mortgage Term Insurance Work?
I’m trying to understand what exactly mortgage protection means, especially terms like mortgage term insurance and home mortgage protection. I live in the U.S. and recently took out a mortgage, so I want to make sure my family won’t lose the house if something happens to me. I’ve also heard about term insurance for mortgage but I’m not sure how it differs from regular life insurance or if it’s worth the cost. Can someone explain how mortgage protection works and why it might be important?
BlockWizard · 2025-07-09 · a month ago1 068Should I Make a House Will? Real Reasons to Have a Will for Your Home and Money
I’m in the U.S. and just bought my first house, and I keep hearing about the importance of “having a will.” I’m not rich, but I do want to make sure my house and will money go to the right people if something happens to me. What exactly is a house will, and why do people say you need one? I’m also curious about the reasons to make a will—especially if you’re younger or don’t have a lot of assets yet. Anyone else here thinking about this or already set up their will?
Should I Make a House Will? Real Reasons to Have a Will for Your Home and Money
I’m in the U.S. and just bought my first house, and I keep hearing about the importance of “having a will.” I’m not rich, but I do want to make sure my house and will money go to the right people if something happens to me. What exactly is a house will, and why do people say you need one? I’m also curious about the reasons to make a will—especially if you’re younger or don’t have a lot of assets yet. Anyone else here thinking about this or already set up their will?
Web3Pioneer · 2025-07-09 · a month ago1 059Is debt relief worth it? Exploring debt consolidation, credit card debt relief, and DIY debt solutions
I’ve been struggling with credit card debt and heard about different options like debt relief programs, debt consolidation, and even some DIY debt solutions. I’m trying to figure out if debt relief is worth it or if I should just keep paying off my debt on my own. Also, I’m curious about what exactly a debt relief program involves and if there are any best credit cards for paying off debt that can help me manage this better. I live in the U.S. and want to make smart financial choices without hurting my credit too much. Can someone explain how debt relief works and whether it’s a good option?
Is debt relief worth it? Exploring debt consolidation, credit card debt relief, and DIY debt solutions
I’ve been struggling with credit card debt and heard about different options like debt relief programs, debt consolidation, and even some DIY debt solutions. I’m trying to figure out if debt relief is worth it or if I should just keep paying off my debt on my own. Also, I’m curious about what exactly a debt relief program involves and if there are any best credit cards for paying off debt that can help me manage this better. I live in the U.S. and want to make smart financial choices without hurting my credit too much. Can someone explain how debt relief works and whether it’s a good option?
EtherElf · 2025-07-08 · a month ago1 060What Is Collision Auto Insurance and Is It Required?
I’m a new driver in California, USA, and shopping for car insurance. I keep hearing about auto collision insurance, but I’m not sure what it covers or if I need it. Is collision insurance required by law in the U.S., or can I skip it to save money? I drive a used sedan, and I’m worried about repair costs if I get into an accident. What’s the deal with auto insurance collision coverage and collision auto coverage? Also, are there tools or platforms like Geico or Progressive that can help me compare policies and understand collision insurance better?
As a beginner, I’m confused about insurance terms and want to make sure I’m protected without overpaying. Can someone explain what is collision coverage in car insurance in simple terms?
What Is Collision Auto Insurance and Is It Required?
I’m a new driver in California, USA, and shopping for car insurance. I keep hearing about auto collision insurance, but I’m not sure what it covers or if I need it. Is collision insurance required by law in the U.S., or can I skip it to save money? I drive a used sedan, and I’m worried about repair costs if I get into an accident. What’s the deal with auto insurance collision coverage and collision auto coverage? Also, are there tools or platforms like Geico or Progressive that can help me compare policies and understand collision insurance better?
As a beginner, I’m confused about insurance terms and want to make sure I’m protected without overpaying. Can someone explain what is collision coverage in car insurance in simple terms?
SatoshiSage · 2025-06-30 · a month ago1 1122What Is a Business Credit Score and Does My Company Need One?
I’m a small business owner in the U.S., just starting out with a bakery in Texas. I’ve heard about business credit scores, but I’m confused about what they are and whether my business even has one. Do businesses have credit scores like individuals do? I’m applying for a loan to buy new equipment, and I keep seeing terms like business credit ratings and corporate credit score. How does this work, and how can I check or improve my business credit rating to secure better loan terms? I want to make sure I’m not missing something that could help my business grow.
As a beginner, I’m worried about navigating financial systems and understanding how business credit scores impact my ability to get funding. Are there tools or platforms to monitor my business credit rating? Any advice for someone new to this?
What Is a Business Credit Score and Does My Company Need One?
I’m a small business owner in the U.S., just starting out with a bakery in Texas. I’ve heard about business credit scores, but I’m confused about what they are and whether my business even has one. Do businesses have credit scores like individuals do? I’m applying for a loan to buy new equipment, and I keep seeing terms like business credit ratings and corporate credit score. How does this work, and how can I check or improve my business credit rating to secure better loan terms? I want to make sure I’m not missing something that could help my business grow.
As a beginner, I’m worried about navigating financial systems and understanding how business credit scores impact my ability to get funding. Are there tools or platforms to monitor my business credit rating? Any advice for someone new to this?
TokenTamer · 2025-06-30 · a month ago1 087How to get a payday loan when you already have one? Tips on installment loan consolidation and payday debt assistance
I’m currently juggling a payday loan and some installment loans, and I’m feeling overwhelmed by the payments. I live in the US, and I’m trying to figure out if I can still get a payday loan when I already have one. Also, I’ve heard about installment loan consolidation and payday debt assistance programs but don’t know how they work or if they can help me manage my debts better. Can anyone explain how to consolidate installment loans or get help with payday loans debt? I want to avoid getting deeper into debt but still need some financial breathing room.
How to get a payday loan when you already have one? Tips on installment loan consolidation and payday debt assistance
I’m currently juggling a payday loan and some installment loans, and I’m feeling overwhelmed by the payments. I live in the US, and I’m trying to figure out if I can still get a payday loan when I already have one. Also, I’ve heard about installment loan consolidation and payday debt assistance programs but don’t know how they work or if they can help me manage my debts better. Can anyone explain how to consolidate installment loans or get help with payday loans debt? I want to avoid getting deeper into debt but still need some financial breathing room.
Web3Pioneer · 2025-06-24 · 2 months ago1 0113How much dwelling coverage do I need for my home or condo?
I’m trying to figure out how much dwelling coverage do I need for my home insurance. I’ve heard that home insurance dwelling coverage is important, but I’m not sure how to calculate the right amount. Also, I live in a condo and want to know if dwelling coverage condo policies work differently. Can someone explain dwelling coverage for condo and how it affects what I should buy? I want to make sure I’m covered without paying too much.
How much dwelling coverage do I need for my home or condo?
I’m trying to figure out how much dwelling coverage do I need for my home insurance. I’ve heard that home insurance dwelling coverage is important, but I’m not sure how to calculate the right amount. Also, I live in a condo and want to know if dwelling coverage condo policies work differently. Can someone explain dwelling coverage for condo and how it affects what I should buy? I want to make sure I’m covered without paying too much.
CryptoCracker · 2025-06-23 · 2 months ago1 045The Best Budgeting App in 2025: Your Ultimate Guide to Smart Money Management
Managing your money can feel overwhelming, especially when bills pile up and expenses sneak up on you. That’s where a budgeting app comes in handy. But with so many options out there, you might be wondering, “What’s the best budgeting app?” or “Is Goodbudget free?” In this guide, we’ll explore some of the best apps for budgeting in 2025, share insights from financial planning app reviews 2019 to now, and help you find the best bill tracker app to keep your finances on point.
Why You Need the Best Budgeting App in 2025
Whether you’re a college student in the U.S., a freelancer working remotely, or a family managing household expenses, a budgeting app helps you track your spending, save money, and plan for the future. The right app can sync with your bank, send reminders, and even help you stick to your financial goals without stress.
In 2025, budgeting apps have evolved with smarter AI features and better security. Plus, many apps now support multiple currencies and integrate with popular platforms like Binance or BYDFi for those also interested in crypto investing.
What’s the Best Budgeting App? Top Picks You Should Know
Here’s a quick look at some of the best budgeting apps that stand out in 2025:
- Goodbudget: A popular choice for envelope budgeting, Goodbudget has a free version that covers basic needs and paid plans for advanced features. It’s great for couples and families who want to share budgets easily.
- YNAB (You Need A Budget): Known for its proactive approach, YNAB helps you assign every dollar a job. It’s a paid app but offers a free trial and is praised for helping users break the paycheck-to-paycheck cycle.
- Mint: A free app that automatically tracks your expenses and bills. Mint is perfect if you want a hands-off approach with alerts for bills and overspending.
- PocketGuard: This app shows you how much you can safely spend after bills and savings, making it ideal for those who want quick insights.
- EveryDollar: Created by financial expert Dave Ramsey, it’s simple and effective for zero-based budgeting.
Is Goodbudget Free? What You Need to Know
If you’re asking, “Is Goodbudget free?”, the answer is yes, but with limits. The free version lets you manage up to 10 envelopes and two devices, which might be enough if you’re just starting out. For unlimited envelopes and accounts, the paid plan is affordable and adds features like debt tracking and priority support.
Why a Financial Planning App Review from 2019 Still Matters
You might wonder why we mention financial planning app reviews 2019. Well, many of the top apps have been improving steadily since then, adding features like bill tracking and investment integration. Looking back at trusted reviews helps you see which apps have stood the test of time and user satisfaction.
Best Bill Tracker App: Never Miss a Payment Again
Late fees can wreck your budget fast. That’s why the best bill tracker app is a must-have. Apps like Mint and Prism excel in this area by sending reminders and showing all your bills in one place. This way, you avoid surprises and keep your credit score healthy.
How to Choose the Right Budgeting App for You
- Consider your goals: Are you saving for a house, paying off debt, or just want to stop overspending?
- Look for features: Sync with your bank, bill reminders, multiple device access, and security are key.
- Try before you buy: Many apps offer free trials or free versions. Test a few to see what fits your style.
- Check compatibility: If you’re into crypto trading on platforms like Binance or BYDFi, find apps that integrate or at least don’t conflict with your other financial tools.
Final Thoughts
Finding the best budgeting app in 2025 means balancing your needs with the features offered. Whether you pick Goodbudget’s free plan or upgrade to a premium app like YNAB, the important part is taking control of your finances today.
Avoid unverified apps that promise quick fixes—stick to trusted platforms with good reviews and security. Start small, track your spending, and watch your financial confidence grow.
Ready to master your money? Download a budgeting app today and take the first step toward smarter financial planning!
The Best Budgeting App in 2025: Your Ultimate Guide to Smart Money Management
Managing your money can feel overwhelming, especially when bills pile up and expenses sneak up on you. That’s where a budgeting app comes in handy. But with so many options out there, you might be wondering, “What’s the best budgeting app?” or “Is Goodbudget free?” In this guide, we’ll explore some of the best apps for budgeting in 2025, share insights from financial planning app reviews 2019 to now, and help you find the best bill tracker app to keep your finances on point.
Why You Need the Best Budgeting App in 2025
Whether you’re a college student in the U.S., a freelancer working remotely, or a family managing household expenses, a budgeting app helps you track your spending, save money, and plan for the future. The right app can sync with your bank, send reminders, and even help you stick to your financial goals without stress.
In 2025, budgeting apps have evolved with smarter AI features and better security. Plus, many apps now support multiple currencies and integrate with popular platforms like Binance or BYDFi for those also interested in crypto investing.
What’s the Best Budgeting App? Top Picks You Should Know
Here’s a quick look at some of the best budgeting apps that stand out in 2025:
- Goodbudget: A popular choice for envelope budgeting, Goodbudget has a free version that covers basic needs and paid plans for advanced features. It’s great for couples and families who want to share budgets easily.
- YNAB (You Need A Budget): Known for its proactive approach, YNAB helps you assign every dollar a job. It’s a paid app but offers a free trial and is praised for helping users break the paycheck-to-paycheck cycle.
- Mint: A free app that automatically tracks your expenses and bills. Mint is perfect if you want a hands-off approach with alerts for bills and overspending.
- PocketGuard: This app shows you how much you can safely spend after bills and savings, making it ideal for those who want quick insights.
- EveryDollar: Created by financial expert Dave Ramsey, it’s simple and effective for zero-based budgeting.
Is Goodbudget Free? What You Need to Know
If you’re asking, “Is Goodbudget free?”, the answer is yes, but with limits. The free version lets you manage up to 10 envelopes and two devices, which might be enough if you’re just starting out. For unlimited envelopes and accounts, the paid plan is affordable and adds features like debt tracking and priority support.
Why a Financial Planning App Review from 2019 Still Matters
You might wonder why we mention financial planning app reviews 2019. Well, many of the top apps have been improving steadily since then, adding features like bill tracking and investment integration. Looking back at trusted reviews helps you see which apps have stood the test of time and user satisfaction.
Best Bill Tracker App: Never Miss a Payment Again
Late fees can wreck your budget fast. That’s why the best bill tracker app is a must-have. Apps like Mint and Prism excel in this area by sending reminders and showing all your bills in one place. This way, you avoid surprises and keep your credit score healthy.
How to Choose the Right Budgeting App for You
- Consider your goals: Are you saving for a house, paying off debt, or just want to stop overspending?
- Look for features: Sync with your bank, bill reminders, multiple device access, and security are key.
- Try before you buy: Many apps offer free trials or free versions. Test a few to see what fits your style.
- Check compatibility: If you’re into crypto trading on platforms like Binance or BYDFi, find apps that integrate or at least don’t conflict with your other financial tools.
Final Thoughts
Finding the best budgeting app in 2025 means balancing your needs with the features offered. Whether you pick Goodbudget’s free plan or upgrade to a premium app like YNAB, the important part is taking control of your finances today.
Avoid unverified apps that promise quick fixes—stick to trusted platforms with good reviews and security. Start small, track your spending, and watch your financial confidence grow.
Ready to master your money? Download a budgeting app today and take the first step toward smarter financial planning!
2025-07-15 · a month ago0 093Don’t Start a Business Without Knowing This: The Truth About Cost of Goods Sold COGS
What Is Cost of Goods Sold (COGS)? Why Every Business Owner Must Understand It
If you run a business—whether you're selling on Amazon, running a Shopify store, or even managing a traditional brick-and-mortar shop—you must understand Cost of Goods Sold (COGS). Why?
Because knowing how to calculate COGS isn't just about crunching numbers—it’s about understanding how much money you’re really making.
COGS is one of the most important accounting metrics that affects your profits, taxes, pricing strategy, and even inventory management. Yet so many business owners and aspiring entrepreneurs ask the same thing:
- What is cost of goods sold?
- How to calculate cost of goods sold?
- Is cost of goods sold an expense?
- What does cost of goods sold mean?
What is Cost of Goods Sold? The Foundation of Your Business’s Profitability
Cost of Goods Sold (COGS) refers to the direct costs of producing the goods or services a business sells during a specific period. These costs include raw materials, labor, and manufacturing expenses but exclude indirect costs like marketing or rent. Understanding what is cost of goods sold is critical for business owners because it directly impacts your gross profit and, ultimately, your bottom line.For example, if you run a coffee shop in the US, your COGS would include the cost of coffee beans, milk, sugar, and the wages of baristas preparing the drinks. In contrast, the rent for your shop or the cost of advertising on social media wouldn’t count as COGS. Knowing this distinction helps you answer, Is cost of goods sold an expense?
Yes, it’s an expense—but a specific one tied directly to production. By mastering COGS, you can:
- Accurately calculate your profit margins.
- Identify areas to cut costs without sacrificing quality.
- Make informed pricing decisions to stay competitive in markets like the US, UK, or Australia.
Why Should You Care About COGS?
Whether you’re a seasoned retailer in New York or a startup owner in London, understanding how to find cost of goods sold is essential for several reasons:
1- Profitability Analysis: COGS directly affects your gross profit, which is calculated as: Gross Profit = Revenue – COGS. A lower COGS means higher profits.
2- Tax Deductions: In many countries, including the US and UK, COGS is deductible, reducing your taxable income.
3- Pricing Strategy: Knowing your COGS helps you set prices that cover costs while remaining competitive.
4- Inventory Management: Tracking COGS helps you monitor inventory levels, avoiding overstocking or shortages.
For instance, a UK-based clothing retailer might notice rising fabric costs impacting their COGS. By analyzing this, they can negotiate better supplier deals or adjust prices to maintain profitability in GBP.
How to Calculate Cost of Goods Sold: The Simple Formula
Let’s get to the heart of the matter: how to calculate cost of goods sold. The cost of goods sold formula is straight forward: COGS = Beginning Inventory + Purchases During the Period – Ending Inventory Here’s a step-by-step guide to make it crystal clear:
1- Determine Your Beginning Inventory: This is the value of your inventory at the start of the accounting period (e.g., January For example, a US bakery might start the year with $10,000 worth of flour, sugar, and other ingredients.
2- Add Purchases During the Period: Include all costs related to acquiring or producing additional inventory, like raw materials or direct labor. If the bakery buys $5,000 more supplies in January, this is added to the equation.
3- Subtract Ending Inventory: At the end of the period (e.g., January 31), calculate the value of unsold inventory. If the bakery has $3,000 left, subtract this amount.
4- Calculate COGS: Using the formula:
COGS = $10,000 (Beginning Inventory) + $5,000 (Purchases) – $3,000 (Ending Inventory) = $12,000
This $12,000 represents the bakery’s COGS for January, reflecting the cost of goods sold to generate revenue.
How to Find Cost of Goods Sold in Different Business Models
The process of how to find cost of goods sold varies slightly depending on your business type:
1- Retail Businesses: For retailers, COGS includes the cost of purchasing products from suppliers. A US-based electronics store, for example, would count the wholesale price of phones or laptops.
2- Manufacturing Businesses: Manufacturers include raw materials, direct labor, and factory overhead. A UK car parts manufacturer would factor in steel, assembly line wages, and machine maintenance costs.
3- Service-Based Businesses: Service businesses may not have traditional inventory, but COGS can include labor costs for service delivery. A freelance graphic designer in Australia might include software subscriptions or printing costs as COGS.
By tailoring your COGS calculation to your business model, you ensure accurate financial reporting, whether you’re dealing in USD, GBP, or AUD.
Is Cost of Goods Sold an Expense? Clearing Up the Confusion
A common question is, “Is cost of goods sold an expense?” The answer is yes, but it’s a specific type of expense. COGS is classified as a direct expense on your income statement, distinct from operating expenses like rent or utilities. This distinction matters because COGS directly ties to revenue generation,
making it a critical metric for assessing business efficiency. For example, a Canadian e-commerce store selling handmade jewelry would list the cost of beads, wires, and packaging as COGS,
while their website hosting fees would fall under operating expenses. Understanding this helps you optimize both direct and indirect costs.
Common Mistakes to Avoid When Calculating COGS
Even seasoned business owners can stumble when calculating COGS. Here are pitfalls to watch out for:
1- Mixing Up Direct and Indirect Costs: Don’t include expenses like marketing or office supplies in COGS. Stick to costs directly tied to production.
2- Inaccurate Inventory Counts: Errors in beginning or ending inventory can skew your COGS, leading to faulty financial decisions.
3- Ignoring Currency Fluctuations: If you operate internationally, account for exchange rates (e.g., USD to EUR) when calculating purchases.
4- Overlooking Labor Costs: For manufacturers or service providers, direct labor (e.g., wages for production workers) must be included in COGS.
By avoiding these mistakes, you’ll ensure your COGS calculations are accurate and actionable.
Pro Tips to Optimize Your COGS and Boost Profits
Now that you know how to calculate cost of goods sold, let’s explore ways to optimize it:
- Negotiate with Suppliers: Bulk discounts or long-term contracts can lower raw material costs, whether you’re in the US or Australia.
- Streamline Production: Invest in efficient processes to reduce labor or manufacturing expenses.
- Monitor Inventory Closely: Use inventory management software to avoid overstocking, which ties up capital and increases COGS.
- Analyze COGS Regularly: Track COGS monthly or quarterly to spot trends and adjust strategies, ensuring profitability in any currency.
For instance, a small business in London might switch to local suppliers to reduce shipping costs, lowering their COGS and boosting profits in GBP.
Ready to Take Control of Your Business Finances?
Understanding what is cost of goods sold and how to calculate cost of goods sold is more than just number-crunching—it’s a game-changer for your business.
cost of goods sold formula, you can make informed decisions that drive profitability and growth. Whether you’re a retailer in the US, a manufacturer in the UK, or a service provider in Australia,
COGS is your key to financial success.
Your Profits Are Hiding in Plain Sight—Start Tracking COGS the Smart Way with BYDFi!
Don’t Start a Business Without Knowing This: The Truth About Cost of Goods Sold COGS
What Is Cost of Goods Sold (COGS)? Why Every Business Owner Must Understand It
If you run a business—whether you're selling on Amazon, running a Shopify store, or even managing a traditional brick-and-mortar shop—you must understand Cost of Goods Sold (COGS). Why?
Because knowing how to calculate COGS isn't just about crunching numbers—it’s about understanding how much money you’re really making.
COGS is one of the most important accounting metrics that affects your profits, taxes, pricing strategy, and even inventory management. Yet so many business owners and aspiring entrepreneurs ask the same thing:
- What is cost of goods sold?
- How to calculate cost of goods sold?
- Is cost of goods sold an expense?
- What does cost of goods sold mean?
What is Cost of Goods Sold? The Foundation of Your Business’s Profitability
Cost of Goods Sold (COGS) refers to the direct costs of producing the goods or services a business sells during a specific period. These costs include raw materials, labor, and manufacturing expenses but exclude indirect costs like marketing or rent. Understanding what is cost of goods sold is critical for business owners because it directly impacts your gross profit and, ultimately, your bottom line.For example, if you run a coffee shop in the US, your COGS would include the cost of coffee beans, milk, sugar, and the wages of baristas preparing the drinks. In contrast, the rent for your shop or the cost of advertising on social media wouldn’t count as COGS. Knowing this distinction helps you answer, Is cost of goods sold an expense?
Yes, it’s an expense—but a specific one tied directly to production. By mastering COGS, you can:
- Accurately calculate your profit margins.
- Identify areas to cut costs without sacrificing quality.
- Make informed pricing decisions to stay competitive in markets like the US, UK, or Australia.
Why Should You Care About COGS?
Whether you’re a seasoned retailer in New York or a startup owner in London, understanding how to find cost of goods sold is essential for several reasons:
1- Profitability Analysis: COGS directly affects your gross profit, which is calculated as: Gross Profit = Revenue – COGS. A lower COGS means higher profits.
2- Tax Deductions: In many countries, including the US and UK, COGS is deductible, reducing your taxable income.
3- Pricing Strategy: Knowing your COGS helps you set prices that cover costs while remaining competitive.
4- Inventory Management: Tracking COGS helps you monitor inventory levels, avoiding overstocking or shortages.
For instance, a UK-based clothing retailer might notice rising fabric costs impacting their COGS. By analyzing this, they can negotiate better supplier deals or adjust prices to maintain profitability in GBP.
How to Calculate Cost of Goods Sold: The Simple Formula
Let’s get to the heart of the matter: how to calculate cost of goods sold. The cost of goods sold formula is straight forward: COGS = Beginning Inventory + Purchases During the Period – Ending Inventory Here’s a step-by-step guide to make it crystal clear:
1- Determine Your Beginning Inventory: This is the value of your inventory at the start of the accounting period (e.g., January For example, a US bakery might start the year with $10,000 worth of flour, sugar, and other ingredients.
2- Add Purchases During the Period: Include all costs related to acquiring or producing additional inventory, like raw materials or direct labor. If the bakery buys $5,000 more supplies in January, this is added to the equation.
3- Subtract Ending Inventory: At the end of the period (e.g., January 31), calculate the value of unsold inventory. If the bakery has $3,000 left, subtract this amount.
4- Calculate COGS: Using the formula:
COGS = $10,000 (Beginning Inventory) + $5,000 (Purchases) – $3,000 (Ending Inventory) = $12,000
This $12,000 represents the bakery’s COGS for January, reflecting the cost of goods sold to generate revenue.
How to Find Cost of Goods Sold in Different Business Models
The process of how to find cost of goods sold varies slightly depending on your business type:
1- Retail Businesses: For retailers, COGS includes the cost of purchasing products from suppliers. A US-based electronics store, for example, would count the wholesale price of phones or laptops.
2- Manufacturing Businesses: Manufacturers include raw materials, direct labor, and factory overhead. A UK car parts manufacturer would factor in steel, assembly line wages, and machine maintenance costs.
3- Service-Based Businesses: Service businesses may not have traditional inventory, but COGS can include labor costs for service delivery. A freelance graphic designer in Australia might include software subscriptions or printing costs as COGS.
By tailoring your COGS calculation to your business model, you ensure accurate financial reporting, whether you’re dealing in USD, GBP, or AUD.
Is Cost of Goods Sold an Expense? Clearing Up the Confusion
A common question is, “Is cost of goods sold an expense?” The answer is yes, but it’s a specific type of expense. COGS is classified as a direct expense on your income statement, distinct from operating expenses like rent or utilities. This distinction matters because COGS directly ties to revenue generation,
making it a critical metric for assessing business efficiency. For example, a Canadian e-commerce store selling handmade jewelry would list the cost of beads, wires, and packaging as COGS,
while their website hosting fees would fall under operating expenses. Understanding this helps you optimize both direct and indirect costs.
Common Mistakes to Avoid When Calculating COGS
Even seasoned business owners can stumble when calculating COGS. Here are pitfalls to watch out for:
1- Mixing Up Direct and Indirect Costs: Don’t include expenses like marketing or office supplies in COGS. Stick to costs directly tied to production.
2- Inaccurate Inventory Counts: Errors in beginning or ending inventory can skew your COGS, leading to faulty financial decisions.
3- Ignoring Currency Fluctuations: If you operate internationally, account for exchange rates (e.g., USD to EUR) when calculating purchases.
4- Overlooking Labor Costs: For manufacturers or service providers, direct labor (e.g., wages for production workers) must be included in COGS.
By avoiding these mistakes, you’ll ensure your COGS calculations are accurate and actionable.
Pro Tips to Optimize Your COGS and Boost Profits
Now that you know how to calculate cost of goods sold, let’s explore ways to optimize it:
- Negotiate with Suppliers: Bulk discounts or long-term contracts can lower raw material costs, whether you’re in the US or Australia.
- Streamline Production: Invest in efficient processes to reduce labor or manufacturing expenses.
- Monitor Inventory Closely: Use inventory management software to avoid overstocking, which ties up capital and increases COGS.
- Analyze COGS Regularly: Track COGS monthly or quarterly to spot trends and adjust strategies, ensuring profitability in any currency.
For instance, a small business in London might switch to local suppliers to reduce shipping costs, lowering their COGS and boosting profits in GBP.
Ready to Take Control of Your Business Finances?
Understanding what is cost of goods sold and how to calculate cost of goods sold is more than just number-crunching—it’s a game-changer for your business.
cost of goods sold formula, you can make informed decisions that drive profitability and growth. Whether you’re a retailer in the US, a manufacturer in the UK, or a service provider in Australia,
COGS is your key to financial success.
Your Profits Are Hiding in Plain Sight—Start Tracking COGS the Smart Way with BYDFi!
2025-07-15 · a month ago0 020