Step 3: Next, figure out the cost of goods sold during the year from the production department of the company.
It will be basically raw material inventory. Step 2: Next, figure out the inventory purchased during the year from the purchasing department of the company. Calculate the ending inventory of the company.īeginning Inventory is calculated using the formula given belowīeginning Inventory = Price per piece * No. The company had a raw material inventory of 3,000 pieces at the beginning of the year priced at $10 per piece and purchased additional inventory worth $40,000 during the year. The company has clocked revenue of $100,000 with a gross margin of 80%. Let us take the example of another manufacturing company XYZ Ltd. Therefore, ABC Ltd has an inventory of $1,500 at the end of the year. Calculate the ending inventory of the company.Įnding Inventory is calculated using the formula given belowĮnding Inventory = Beginning Inventory + Inventory Purchased During the Year – Cost of Goods Sold Let us take the example of a manufacturing company ABC Ltd where the inventory at the beginning of the year is $2,500, additional inventory purchased during the year is $3,000 and the cost of goods sold consumed in the manufacturing of the product is $4,000.
#FORMULA OF CLOSING INVENTORY DOWNLOAD#
You can download this Ending Inventory Formula Excel Template here – Ending Inventory Formula Excel Template Ending Inventory Formula – Example #1
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