What Is Included in Cost of Goods Sold? An In-Depth Explanation

Costofgoodssold26 Feb, 2025Technology

The cost of goods sold (COGS) represents direct costs associated with product manufacturing and sales. It includes raw materials, labor wages, and factory overheads. COGS also accounts for shipping expenses related to inventory procurement. Indirect costs like advertising, rent, and office supplies are not part of COGS. Properly tracking what is included in the cost of goods sold ensures businesses report accurate financial data. Reducing COGS can increase net profit margins, making it vital for business owners. Understanding these expenses helps in tax deductions and efficient resource allocation. Learn how COGS impacts financial statements and business growth.