Final answer:
The COGS is calculated by subtracting Ending Inventory (E/I) from the Goods Available for Sale. The Goods Available for Sale typically includes the Beginning Inventory plus any Purchases made during the period.
Step-by-step explanation:
The student is asking how to calculate the Cost of Goods Sold (COGS) when they are given the goods available for sale and E/I, which likely refers to ending inventory. In accounting, the formula for COGS is:
COGS = Beginning Inventory + Purchases during the period - Ending Inventory
The goods available for sale can generally be considered as the total of Beginning Inventory and Purchases. Therefore, if 'goods available for sale' encompasses both the beginning inventory and any purchases made, the calculation for COGS would be straightforward:
COGS = Goods Available for Sale - E/I (Ending Inventory)
It is important to remember that COGS represents the direct costs attributable to the production of the goods sold by a company. This will include the cost of the materials used in creating the good, along with the direct labor costs used to produce the good.