COGS and Inventory Valuation. 1. COGS is an acronym, what do the letters stand for? 2. There is a formula for calculating COGS.. list the formula. Ex.. COGS = Then, define each variable in the COGS formula, and tell me where do the associated numbers/values for each variable come from. 3. Define the term Inventory Valuation. Define it and explain, in your own words, the significance of this term operationally.