Cost of goods sold (
COGS) refer to the
carrying value of goods sold during a particular period.
Costs are associated with particular goods using one of several formulas, including specific identification, first-in first-out (FIFO), or average cost. Costs include all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Costs of goods made by the business include material, labor, and allocated overhead. The costs of those goods not yet sold are deferred as costs of inventory until the inventory is sold or written down in value
Kefolla is right. Accounting applies the matching principle. These COGS are associated only with product sold and not costs of goods sitting in inventory.
AJX current gross margins are shockingly low and they are basically selling product at cost. I hope many of these sales were at agreed trial pricing to allow the customer to validate the product and not ongoing commercial pricing otherwise the company is in serious trouble !
Pinto, I don't agree that increased volumes will drive down manufacturing costs significantly. In a tolling agreement the price set is normally a unit cost and there is little leverage for dilution of fixed costs as there is when the company owns their own production assets.
I hold but would really like some commentary from management on these gross margins !
