COGS Tracking and Allocation

Overview

Tracking Cost of Goods Sold (COGS) tells you the actual gross margin on every order — revenue minus what you paid for the products you sold. Most platforms let you enter a cost price per product, and accounting integrations (QuickBooks, Xero) use that to generate COGS entries automatically. Landed cost allocation (freight, customs, duties) requires either a dedicated app or manual allocation in your accounting software. Only build a custom COGS system if your platform cannot meet your costing method requirements (FIFO, weighted average).

When to Use This Skill

• When your income statement shows revenue but you cannot compute gross margin because unit costs are not tracked
• When importing goods internationally and needing to allocate freight, customs, and duties into the landed cost of each SKU
• When switching from periodic (year-end count) to perpetual (real-time) cost tracking
• When building variance analysis reports to identify SKUs where actual purchase costs are drifting from standard costs
• When an ERP integration (QuickBooks, NetSuite, Xero) requires COGS journal entries at time of sale

Core Instructions

Step 1: Determine platform and choose the right approach