[header] How to calculate cogs [title] Find out the average cost of purchased inventory. [step] Average cost is not only an acceptable reporting method but also can be a helpful way to think about the products in your inventory over a longer scale of time. Add all inventory purchase prices for a single product type together and divide by the number of products purchased to get the average cost. 
[substeps] For example, $1.00 + $1.50/2 = $1.25 average cost. [title] Find out the average cost of the goods you produced.