Question

Forecast the 2019 Cost of goods sold on the previous year’s number and the assumptions



2018 Actual

2019 Estimate

Sales Growth

6%

8%

Gross Margin

40%

40%

Revenues

50,000



Cost of Goods Sold

30,000

32,400
35,200
29,160
26,630

Answer 1

The cost of goods sold based on the sales revenue in 2019 is $32,400

What is the cost of goods sold?

The cost of goods sold is the cost of the goods sold in a particular year, it is determine as the sales revenue minus the gross margin in dollar terms.

We need to first of all determine the sales revenue in 2019 based on 2018 sales revenue and the 2019 growth rate of 8%

2019 sales revenue=50,000*(1+8%)

2019 sales revenue=$54,000

Now the gross margin is 40% of sales revenue

cost of goods sold=sales revenue-gross margin

cost of goods sold=$54,000-(40%*$54,000)

cost of goods sold=$32,400

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