UK Cost of goods sold when selling cups of coffee

[Barca]

For a coffee bar business, how do you calculate the cost of goods sold for the purpose of the accounting records? Do you simply check the inventory every day and see how much coffee has been used up? Or are you supposed to estimate or measure exactly how much coffee you are putting into each cup and then work out the cost of goods sold, and then compare with the inventory to make sure that no coffee has disappeared?

 

[Steve-LevelUp]

You could approach it as a mix of the two. You know how much coffee is used per cup. You can then estimate your usage over time. If you sell 1000 cups per day, then you should know approximately how much coffee and supplies you should go through. Every month, you could do a key inventory check to see if your actual inventory levels are near your 'standard'.

I will add that it has been a long time since I have worked actively with inventory, so others with more recent inventory experience could help.

 

[Fidget]

Cost of goods sold is geared towards manufacturing, so if you're just selling coffee in cups, then all of your costs are your cost of goods sold - ergo, all of it is a direct cost.

Tracking inventory is a separate thing. Dependant upon how sophisticated the system is you could have 'right now' inventory levels or periodic checks with a final year end check.