A company has beginning inventory of $100,000, purchases of $400,000, and ending inventory of $80,000. Calculate the cost of goods sold (COGS). Given total sales of $600,000, calculate the gross profit and gross profit margin. Discuss the significance of COGS in determining gross profit and evaluating a company’s production efficiency. Analyze the potential factors that could influence changes in COGS, such as variations in inventory levels, purchase costs, and production efficiency. Consider the implications of a high or low COGS for the company’s profitability and pricing strategies. Discuss the strategic importance of managing COGS, including optimizing inventory management, negotiating favorable supplier terms, and improving production processes. Explain how gross profit and gross profit margin can be used in performance evaluation, benchmarking, and strategic decision-making. Discuss the limitations of these metrics and how they can be complemented with other financial measures.