How do I create a COGS rule and what are the implications?

Your COGS rule determines the COGS expense that will be booked when you make a sale.

For example, if you have a COGS rule of 41%, then for every dollar of sales that you make, $0.41 will be booked as your COGS expense.

The simple math to figure out your COGS % is:

For example, if you sell a product for $4.59, and your unit cost is $1.89:

When you purchase raw materials and ingredients, that cost is categorized as an Inventory Asset and increases your Inventory Asset balance. When COGS is booked, it reduces your Inventory Asset balance.