1. What Is CMV (Cost of Goods Sold)?

CMV (Custo das Mercadorias Vendidas) or Cost of Goods Sold (COGS) represents the direct costs attributable to the production of goods sold by a company. This amount includes the cost of materials and direct labor used to create the product.

2. How Does the CMV Calculation Work?

The calculator uses the standard CMV formula:

Where:

• Initial Inventory — Value of inventory at the beginning of the period
• Purchases — Additional inventory purchased during the period
• Final Inventory — Value of inventory at the end of the period

Explanation: This formula calculates the total cost of inventory that was sold during a specific accounting period.

3. Importance of CMV Calculation

Details: Accurate CMV calculation is essential for determining gross profit, analyzing business performance, preparing financial statements, and making informed business decisions.

4. Using the Calculator

Tips: Enter all values in dollars. Ensure your inventory values are accurate and reflect the same accounting period. All values must be non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's included in purchases for CMV calculation?
A: Purchases include all inventory acquisitions during the period, including freight-in and import duties directly related to acquiring goods.

Q2: How does CMV affect gross profit?
A: Gross profit is calculated as Net Sales minus CMV. A lower CMV results in higher gross profit, assuming sales remain constant.

Q3: How often should CMV be calculated?
A: Typically calculated monthly, quarterly, and annually for financial reporting purposes.

Q4: Are there different inventory valuation methods that affect CMV?
A: Yes, methods like FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and weighted average can produce different CMV values.

Q5: What if my CMV calculation results in a negative number?
A: A negative CMV typically indicates an error in inventory tracking, such as final inventory exceeding the sum of initial inventory and purchases.