Finished Goods Inventory Calculator

Managing inventory effectively is crucial for any business involved in manufacturing or product sales. One key component of inventory accounting is tracking Finished Goods Inventory – the value of products that are completed and ready for sale but haven’t been sold yet.

What is Finished Goods Inventory?

Finished Goods Inventory refers to the total value of manufactured products that are ready for sale at the end of an accounting period. It is a part of the company’s current assets and plays a vital role in calculating overall profitability.

Finished Goods Inventory Formula

To calculate the Ending Finished Goods Inventory, you can use the following formula:

$\text{Ending Finished Goods Inventory}=\text{Beginning Finished Goods Inventory}+\text{COGM}-\text{COGS}$$$$$

Key Terms Explained

1. Beginning Finished Goods Inventory

The value of finished goods that were unsold at the beginning of the accounting period.

2. Cost of Goods Manufactured (COGM)

The total production cost of goods completed during the period. It includes direct labor, direct materials, and manufacturing overhead.

3. Cost of Goods Sold (COGS)

The cost incurred to produce the goods that were actually sold during the period.

Rearranged Formula (if needed)

If you need to find other variables from the same formula, here are rearranged versions:

To find COGS:

$\text{COGS}=\text{Beginning Finished Goods Inventory}+\text{COGM}-\text{Ending Finished Goods Inventory}$

To find Beginning Finished Goods Inventory:

$\text{Beginning Finished Goods Inventory}=\text{Ending Finished Goods Inventory}+\text{COGS}-\text{COGM}$

Example Calculation

Let’s say you’re trying to calculate the Ending Finished Goods Inventory for a quarter using the following data:

• Beginning Finished Goods Inventory = $10,000
• Cost of Goods Manufactured (COGM) = $25,000
• Cost of Goods Sold (COGS) = $20,000

Step-by-step Calculation:

$\text{Ending Finished Goods Inventory}=10,000+25,000-20,000$

$\text{Ending Finished Goods Inventory}=15,000$

Conclusion

Understanding and calculating your Finished Goods Inventory helps you keep accurate financial records, monitor production efficiency, and make smart business decisions. Use our calculator above to save time and ensure precision in your accounting process.