---
title: Cost of Goods Sold (COGS)
description: Cost of Goods Sold (COGS) is the total cost of inventory sold during a specific period, including purchase costs and shipping, but excluding overhead. In Approach, COGS is calculated using Weighted Cost Averaging (WCA) whenever inventory changes occur through Receivings or Reductions. This ensures that product costs displayed in the system are accurate and updated automatically, rather than manually edited. Features like Receivings, Inventory Audits, and cost display updates all work together to maintain precise COGS for better pricing and profitability tracking.
---
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# Cost of Goods Sold (COGS)
## Cost of Goods Sold (COGS) is the total cost of inventory sold during a specific period, including purchase costs and shipping, but excluding overhead. In Approach, COGS is calculated using Weighted Cost Averaging (WCA) whenever inventory changes occur through Receivings or Reductions. This ensures that product costs displayed in the system are accurate and updated automatically, rather than manually edited. Features like Receivings, Inventory Audits, and cost display updates all work together to maintain precise COGS for better pricing and profitability tracking.
#### Table of Contents
- [Setup and General Questions](https://support.approach.app/knowledge-base/cost-of-goods-sold#Setup)
- [New Inventory Audits](https://support.approach.app/knowledge-base/cost-of-goods-sold#audits)
- [Vendors](https://support.approach.app/knowledge-base/cost-of-goods-sold#vendors)
- [Receivings/Reductions](https://support.approach.app/knowledge-base/cost-of-goods-sold#receivings)
- [Adjusting Product Logs](https://support.approach.app/knowledge-base/cost-of-goods-sold#adjusting)
- [Exporting Logs and Audits](https://support.approach.app/knowledge-base/cost-of-goods-sold#exporting)
- [Wholesale Costs and Products](https://support.approach.app/knowledge-base/cost-of-goods-sold#wholesale)
#### What is Cost of Goods Sold (COGS)?
**Costs of Goods Sold (COGS)** is an important inventory management tool that represents the direct costs associated with obtaining goods that a company sells during a specific period.
- Includes the costs of purchasing inventory from suppliers, which is then resold to customers.
- This is a critical measure and data point for retailers as it directly impacts the gross profit and overall profitability of the business.
#### Do I need to do anything to enable COGS?
Nope! All you need to do is **enable Inventory** for a product to activate COGS. **Existing inventory** will carry over, and your next **Receiving** will establish your new average cost.
#### Can I still track items without using COGS?
Yes, you can still use inventory counts and product management. COGS simply adds the ability to see your true costs and margins for better reporting!
If you have custom staff roles, these must be adjusted to your gym's needs. **Staff** (a protected role) will not have access to the section. **Admin** and **Owner** roles have this automatically. [Staff Permissions](https://support.approach.app/knowledge-base/release-notes-september-25th-2025?hsLang=en)
#### Inventory Audits: A Streamlined Way to Manage Stock Adjustments
**Inventory Audits** (formerly Inventory Logs) ensures accurate stock management while improving usability and control for managers.
Creating an **Inventory Audit**:
1. Go to *Store Admin.*
2. Navigate to *Inventory Audits.*
3. Select *Add Inventory Audit.*
4. Fill in necessary details: *Date* and *Description.*
5. Add Products using the *Add Product* component.
Once this is complied, there will be 2 options for saving the audit.
- "**Save**"
- This will save the audit with an "***In Progress***" status. This will not yet update the Inventory on the Products.
- Intended for adding Purchase Order (PO number) once Products are ordered but not yet delivered.
- Allows going back in and updating the audit.
- "**Save and Finish**"
- This will save the audit, update *Product Inventory*, and mark a "***Completed***" status.
- This will not appear until at least one *Product* is added to the audit.
Once an Inventory Audit is **Completed**, it cannot be edited, only viewed.
#### Creating and Managing Vendors
The Vendors feature helps you store supplier information and link vendors to inventory items for optimal purchasing workflows.
To manage **Vendors**:
1. Navigate to *Store Admin.*
2. Select *Vendors* tab.
3. Click *Add Vendor.*
4. Fill in necessary details: *Name, Status, Contact Information, Internal Notes*
Linking **Vendors to Products**:
1. Navigate to *Store Admin*
2. Select *Products*
3. Open the *Product* you'd like to edit
4. Select the Vendor field dropdown
#### Receivings & Reductions: Accurate Inventory and Costing with WCA
Use **Receivings** to record *incoming* **(Receiving)** or *outgoing* **(Reduction)** inventory, capture related *costs*, and automatically update **COGS** using **Weighted Cost Averaging (WCA)** once the record is completed.
Create a new **Receiving/Reduction** record:
1. Go to *Store Admin.*
2. Select *Receivings.*
1. View record details *Description, Purchase Order No., Vendor, Date, Staff, Location, Type* (Receiving or Reduction)*, Status* (In Progress or Completed)*.*
3. Click *Add New Receiving/Reduction* to open a new form.
4. Fill in necessary details: *Date, Description, Vendor, Purchase Order Number, Adjustment Type* (Receiving or Reduction).
5. Hit *Save*.
6. Click *Add Products.*
7. Select *Products* and their *Variants* for the receiving/reduction.
8. Fill in necessary details: *Quantity Received, Total Cost, Cost/Item (Cost per Item).*
**Receiving** and **Reductions** require *cost* and *quantity* for each product.
1. Enter the *Quantity* of **Received** or **Reduced** items.
2. Enter one of the cost fields:
1. *Total Cost* or *Cost per Item*.
1. Only fill out **one or the other**; Approach will calculate the other field **automatically**.
2. Example: *Quantity of 10 and $100 total cost, the cost per item will calculate with $10*.
#### Adjusting Product Inventory from Product page
We’ve updated the product inventory update flow in the **Product** page. You will only be able to update the *observed count* of a product. Adding new quantity has been removed and will be managed in the **Receiving** page.
In *Products* page:
1. Select the **Product** you'd like to edit.
2. Navigate to the *Inventory* section.
3. Click *Add/Update Inventory* and adjust quantity as needed.
Approach will automatically **update the product's inventory** and create a new **Product Adjustment Log** entry with, **Type**: *Adjustment*, **Description**: *Product Edit*, **Details**: *Variant Name, Location, Staff,* and *Quantity.*
#### Product Adjustment Log
Approach has added a new **Log** to **Products** that will track the increase and decrease of **Inventory** **Quantities**, when they happened, how they happened, and the staff that was part of the quantity changed. **Inventory** must be *enabled* for the **Product**. The log will include an entry for the following reasons referencing quantity A*djustment Type*:
- **Purchase**: When inventory is reduced from a *purchase*.
- **Return:** When inventory is increased from a *return*.
- **Adjustment:** When inventory is *increased* or *reduced* from an **Inventory** **Audit**. This includes quantity changes made from the **Product** page “*Add/Update Inventory*” flow.
- **Receiving**: When inventory is increased from a *receiving*.
- **Reduction:** When inventory is decreased from a *reduction*.
- **Legacy Log**: References *Inventory Logs (Depreciated)*.
#### Exporting Product and Audit Logs
We’ve added a **PDF download option** for **Inventory Audits** and **Receivings** so you can easily keep records for compliance, reporting, or internal documentation.
Where to download PDF
1. Navigate to *Store Admin.*
2. Select *Inventory Audits* or *Receivings.*
3. Click the three-dot menu next to record.
4. Select *Download PDF.*
The PDF file will be named from the audit or receiving and unique ID found in the URL (ex. InventoryAudit\_123.pdf). These will include all the content added into the audit or receiving.
Any previously created Inventory Logs will be read-only and not editable. They can be found in "*Inventory Logs (Depreciated)*" under *Store* *Admin*.
#### Wholesale Costs and Products
Here is how cost information is displayed in product screens to ensure accuracy when **Inventory Management** is enabled. This aligns product cost with COGS (Cost of Goods Sold) calculations. This ensures cost accuracy by using **Weighted Cost Averaging (WCA)** from inventory transactions.
When Inventory is turned ON:
- The **Wholesale Cost field** on product detail pages displays *See Inventory*, which links to the *Inventory* page for detailed cost information.
The Product Management page:
- Updates the **Wholesale Cost column** to show the **COGS cost average**.
- The column label changes to **Cost** when inventory is enabled.
The Inventory page:
- **Wholesale Cost** is set here.
- Adds a **Cost column** showing the **COGS cost average** for each product.
Cost cannot be edited directly on the product page, it will be available for updates through **Receivings**.
### Helping Hands:
[Variants](https://support.approach.app/knowledge-base/creating-variant-types?hsLang=en)
[Product Management](https://support.approach.app/knowledge-base/product-management?hsLang=en)
[Quicksight](https://support.approach.app/knowledge-base/welcome-to-quicksight?hsLang=en)
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