Cost of Sales Accounting

[Noshington]

Good Afternoon.

My wife runs a coffee shop and bistro and I, for my sins, do the bookkeeping. I have no accountancy training, just a good spreadsheet from someone who has.

At present I exclude the cost of takeaway coffee cups from my Cost of Sales figures. Two professional accounting friends agree but I have been getting conflicting signals from some other professional accountants who insist that the cups are a Cost of Sales item. Some also say that the takeaway containers for cakes etc should be a cost of sales item too

I'd be grateful to find out how people in this forum deal with it.

Thanks in advance - Tony

 

[CanadianBrian]

I agree that it should be a cost of goods cost because you don't have them hold out their hand and pour the coffee into it. It also depends how you handle things like cream,sugar,stir stix and such. If these is a cost of goods item then the cups would also be but harder to pinpoint on one cup as not everyone uses these items.

 

[expat]

If you care to share the spreadsheet you're using I'd love to take a look. I'm in the same boat as you, paying for my sins by keeping the books and chasing slow payers -- among a few hundred other things.

And if you do want to share you can email it to me at [email protected].

Thanks!

 

[AlaskaAng]

My business is food rather than coffee, but the premise is the same. Containers are definitely included in my cost of goods sold. I don't include things like napkins because they are not a one to one ratio, but I can't serve you a dish of food without the dish.

 

[Noshington]

Thanks for the replies

I understand the principle ok but where does it stop? By that reckoning should the plates cups knives and forks for sit in customers also be cost of sales?

Tony

ex-pat - it's something we're developing for coffee shops with a view to marketing it.

 

[Flatron]

Everything that enters in the making of, or comes with, the products that you are selling are to be listed in the Costs Of Goods Sold.
Cuttelry, dishes, etc. are not part of the COGS since the customers don't bring them home; they're part of your assets.

 

[birchstick]

Cost of takeaway cups could be considered both a direct cost or an indirect cost of production depending on how you want to argue it. But, I think the best answer is that they are direct costs of your sold product because takeaway cups are a part of the cost of your sold item. Coffee sold with takeaway cups make the sold coffee more expensive than the coffees you sell without takeaway cups; they lower your margins directly and measurably.