Your company has sales of ​$104 comma 600 this year and cost of goods sold of ​$65 comma 300. You forecast sales to increase to $ 115 comma 400 next year. Using the percent of sales​ method, forecast next​ year's cost of goods sold.
The Tax Cuts and Jobs Act of 2017 temporarily allowed​ 100% bonus depreciation​ (effectively expensing capital​ expenditures). However, we will still include depreciation forecasting in this chapter and in these problems.
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Part 1
The forecasted cost of goods sold​ (COGS) is ​$
  
enter your response here.  ​(Round to the nearest​ dollar.)

To forecast next year's cost of goods sold (COGS) using the percent of sales method, we first need to determine the proportion of COGS to sales for this year. Then, we will apply that percentage to the forecasted sales for next year.

### Step 1: Calculate this year's COGS percentage
This year's sales = $104,600  
This year's COGS = $65,300  

The percentage of sales that goes to COGS is calculated as:

\[
\text{COGS \%} = \left( \frac{\text{COGS}}{\text{Sales}} \right) \times 100 = \left( \frac{65,300}{104,600} \right) \times 100 \approx 62.42\%
\]

### Step 2: Apply this percentage to next year's forecasted sales
Next year's forecasted sales = $115,400  
We now use the 62.42% to forecast next year's COGS:

\[
\text{Forecasted COGS} = 62.42\% \times 115,400 = 0.6242 \times 115,400 \approx 72,013.88
\]

### Step 3: Round to the nearest dollar
The forecasted COGS for next year is approximately **$72,014**.

Would you like further details or have any questions?

Here are 5 related questions to expand your understanding:
1. How does the percent of sales method help in forecasting financial figures?
2. What are other methods of forecasting COGS aside from the percent of sales method?
3. How do fluctuations in sales impact gross profit margin?
4. Why is forecasting COGS important for business planning?
5. How does depreciation factor into financial forecasting?

**Tip:** Regularly reviewing COGS trends helps identify cost-saving opportunities and improve profitability strategies.

Your company has sales of $104,600 this year and cost of goods sold of $65,300. You forecast sales to increase to $115,400 next year. Using the percent of sales method, forecast next year's cost of goods sold. The Tax Cuts and Jobs Act of 2017 temporarily allowed 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems.

Learn how to use the percent of sales method to forecast the cost of goods sold (COGS) for next year. Given this year's sales of $104,600 and COGS of $65,300, calculate the forecasted COGS with next year's predicted sales of $115,400. Detailed step-by-step solution included.

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