CategoryHierarchies.com

Cost of Goods Sold (COGS) refers to the direct costs attributable to the production of goods sold by a business during a specific period. These costs typically include raw materials, labor, and overhead expenses directly involved in the manufacturing process. COGS does not encompass other business expenses such as marketing, distribution, or administrative costs. By accurately tracking COGS, businesses can effectively calculate gross profit margins, which aid in assessing overall operational efficiency and inform strategic decision-making.