Definition of cost of sales method
In the cost of sales method, the costs and revenues of the products sold are compared. It should be as Item income statement be structured according to products or product groups.
The costs of the individual products or product groups are taken as cost from the unit cost unit accounting, the revenues result from the outgoing invoices.
In contrast to the total cost method, changes in inventory do not have to be taken into account. For this, the existence of a qualified cost accounting is required.
The cost of sales method can be carried out mathematically, in bookkeeping or in statistical tabular form using a cost unit sheet.