What is Cost of Goods Sold (COGS)?
COGS is opening stock + purchases − closing stock. It is the direct cost of producing or buying the goods you sold in a period.
A real Kenyan example
Opening stock KES 200k + purchases KES 900k − closing stock KES 250k = COGS KES 850k.
Formula
COGS = Opening stock + Purchases − Closing stock
Why it matters
COGS sits between revenue and gross profit. Tiny shifts in COGS move profit decisively.
How Veira helps
Every sale + every stock movement in Veira updates COGS in real time, so you stop guessing.
FAQs
Is rent part of COGS?
No, rent is an operating expense.
Are wages part of COGS?
Only direct production wages (chefs in a restaurant). Office salaries are operating expenses.
What about freight?
Freight-in (delivery to your warehouse) is part of COGS. Freight-out (delivery to customer) is operating.
How does shrinkage affect COGS?
It increases COGS (closing stock falls), and so reduces gross margin.
Does Veira compute COGS automatically?
Yes, every receipt + every stock receipt updates COGS instantly.