Accounting for Cost of Goods Sold

[John Jason Jordan]

<Changed thread title>

On Sun, 28 Jun 2009 16:32:48 -0400
Mike or Penny Novack <stepbystepfarm at mtdata.com> dijo:

> That's not particularly hard. You put this inventory down on the books 
> for what it COST you. There were materials used, yes? You don't add in 
> for your time, though this is precisely where a "second set of books" 
> might be a good idea (even though your own time isn't an expense for tax 
> purposes in analyzing your business might be a good idea of being able 
> to determine how your business WOULD HAVE been faring had the goods been 
> produced by purchased labor). In your case you get to "draw" from the 
> profits as this inventory gets sold.
> 
> Might I suggest that you might perhaps need to obtain learning materials 
> along the lines of "accounting for the small business", "accounting for 
> the sole proprietorship", etc. Before the days of Google people were 
> able to obtain information like that via a medium known as books. 
> Strange as it might seem in this computer age, those old fashioned 
> things still exist. Use the Internet to search out potentially useful 
> titles. For example, your local library system might have a searchable 
> catalog which you can go after "by subject material" and then once you 
> have found some promising titles let you request the books.

Books? Guess what? That's my business - publishing books! LOL

Anyway, I'm not that bad off. I do understand COGS and how to do it.
What had me flummoxed was that all the examples (and yes, textbooks
that I consulted) assumed that I would have a precise cost per book. If
you are publishing thousands of titles you have cost accountants to
figure that out down to a gnat's fanny. Or if you are a retailer you
just use the price you paid for the commodity. Or you are supposed to
have a work-in-progress setup where materials are moved in and out. 

In my case I can't get very precise figures. I buy a pallet of paper
and use it to produce books. I print on massive lasers, so there is
toner cost as well. But there's waste in paper usage, and some books
have denser toner coverage because of graphics, etc. I can figure out a
cost, but it could be 10% off. As for moving materials in and out, that
isn't going to work either. I am typically printing more than one book
at a time and swapping toner back and forth among printers, paper is
coming from the pallet and used to fill input trays willy-nilly, and
then a printer breaks down and I have to finish a job on another
printer. 

Anyway, I have concluded that I'm just going to do the best I can on
COGS and that's going to have to be good enough. At some point it's
time to quit doing the books and start doing the beer. :)

Thanks to all for the suggestions, including the kind of off-topic
accounting issues. Now I'm off to figure out GnuCash invoices.