Current Cost of Sales Adjustment (COSA)

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on June 22, 2021


The CCA technique, cost of sales are to be calculated on the basis of the cost of replacing the goods at the time they are sold. The important principle is that current costs must be matched with current revenues. Sale is current revenue and out of the costs, all operating expenses are current costs. The case of inventories, certain adjustments will have to be made, known as the cost of sales adjustment.

Cost of Sales Adjustment (COSA) Formula

Cost of sales adjustment can be calculated with the help of the following formula:
Cost of Sales Adjustment (COSA) Formula
C = Historical cost of closing stock
O = Historical cost of opening stock
Ia = Average Index number
Ic = Index number appropriate to closing stock
Io = Index number appropriate to opening stock
This has been explained in the following example.


Calculate the Cost of sales adjustment (COSA) from the following:

Historical Cost Index Number
$ $
Opening Stock 52,000 100
Purchases 2,20,000 110
Total goods 2,72,000
Less: Closing Stock 72,000 120
Cost of sales 2,00,000

Cost of Sales Adjustment (COSA) Formula
COSA = (72,000 – 52,000) – 110 (72,000 / 120 – 52,000 / 120)
= 20,000 – 110 (600 – 520)
= 20,000 – 8,800
Cost of sales adjustment can also be calculated as under:
Current Cost of Sales (COSA) Example
COSA = Current cost of sales – Historical cost of sales
= 2,11,200 – 2,00,000
= $11,200

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