Expense or Cost of Goods Sold?

Question

If you own an online retail business. Are the boxes that you use to ship your products to your customers an expense or cost of goods sold? Please only answer if you know about this stuff.

Answer 1

Shipping costs are a part of cost of goods sold as long as they're part of the product.

They are a selling expense if you can seperate the packaging and sell the product without changing it.

For example, the plastic wrap around a sandwhich is part of the product. The envelope you put it in to mail it is a selling expense.

Answer 2

If you're a store owner, then there will be a certain cost to you of obtaining the items you carry in your inventory - purchase price, shipping, taxes. Things like salaries of your employees, rent on the store, property taxes, "shrinkage" etc could be called Operating Expenses. You need to add these two kinds of costs together to get an idea of what sort of profit you are earning.

Answer 3

Expense.

CGS Formula: Beginning Inventory, plus Purchases, less Ending Inventory = Cost of Goods Sold. Unless you're in the business of selling boxes, they're not CGS.

Answer 4

I would definitely put it as a COG. Think of it as this: you are an online retailer and can not sell without shipping, you can not ship without boxes.

COG's do not have to be "purchases" - meaning the actual item you are selling - they are any direct costs. You would also consider your shipping service a COG.

Answer 5

It is an expense. can be categorised under carriage outwards. it is not a cost of good sold.

Answer 6

Boxes are a selling expense...not COGS.