﻿

# Cost Of Goods Sold - COGS

The direct costs attributable to the production of the goods sold by a company. This amount includes the cost of the materials used in creating the good along with the direct labor costs used to produce the good. It excludes indirect expenses such as distribution costs and sales force costs. COGS appears on the income statement and can be deducted from revenue to calculate a company's gross margin. Also referred to as "cost of sales".

COGS is the costs that go into creating the products that a company sells; therefore, the only costs included in the measure are those that are directly tied to the production of the products. For example, the COGS for an automaker would include the material costs for the parts that go into making the car along with the labor costs used to put the car together. The cost of sending the cars to dealerships and the cost of the labor used to sell the car would be excluded. The exact costs included in the COGS calculation will differ from one type of business to another. The cost of goods attributed to a company's products are expensed as the company sells these goods. There are several ways to calculate COGS but one of the more basic ways is to start with the beginning inventory for the period and add the total amount of purchases made during the period then deducting the ending inventory. This calculation gives the total amount of inventory or, more specifically, the cost of this inventory, sold by the company during the period. Therefore, if a company starts with \$10 million in inventory, makes \$2 million in purchases and ends the period with \$9 million in inventory, the company's cost of goods for the period would be \$3 million (\$10 million + \$2 million - \$9 million).

Investment dictionary. . 2012.

### Look at other dictionaries:

• cost of goods sold — overall expenditures due to the products that the business marketed (Accounting) …   English contemporary dictionary

• Себестоимость реализации, Себестоимость реализованных товаров (COST OF SALES, COST OF GOODS SOLD)  — Себестоимость товаров или услуг, реализация которых отражена в доходах; другими словами, себестоимость произведенной (закупленной) продукции плюс или минус изменение в запасах готовой продукции (или товаров) …   Словарь терминов по управленческому учету

• cost of sales — ˌcost of ˈsales noun [uncountable] ACCOUNTING another name for cost of goods sold: • Fuel represented less than 3% of Carnival s cost of sales. * * *    ► See Operating Costs. * * * cost of sales UK US noun [U] ACCOUNTING …   Financial and business terms

• sold — [səʊld ǁ soʊld] verb the past tense and past participle of sell see also cost of goods sold …   Financial and business terms

• Cost accounting — Accountancy Key concepts Accountant · Accounting period · Bookkeeping · Cash and accrual basis · Cash flow management · Chart of accounts  …   Wikipedia

• cost of sales — /ˌkɒst əv seɪlz/ noun all the costs of a product sold, including manufacturing costs and the staff costs of the production department, before general overheads are calculated. Also called cost of goods sold …   Dictionary of banking and finance

• cost, freight and insurance — COMMERCE ➔ Incoterm * * * cost, freight and insurance UK US noun [U] (ABBREVIATION CFI) TRANSPORT, INSURANCE ► used as an incoterm to mean that the total price of goods sold includes the price of …   Financial and business terms

• cost, insurance and freight — COMMERCE ➔ Incoterm * * *    ► See CIF. * * * cost, insurance and freight UK US noun [U] (ABBREVIATION CIF) ► TRANSPORT, INSURA …   Financial and business terms

• Cost and Freight — ( CFR) Seller is responsible for the payment of freight to carry goods to a named destination, as agreed with the buyer. This should be used with ocean shipments only, as the point where risk and responsibility pass from seller to buyer is the… …   Financial and business terms

• cost of sales — 1. in retailing : the purchase cost or inventory value of merchandise sold during a stated period plus the cost of direct work thereon (as alterations or workroom charges) 2. in manufacturing : the production cost or inventory value of goods sold …   Useful english dictionary

• Cost-Volume-Profit Analysis — Cost Volume profit (CVP), in managerial economics is a form of cost accounting. It is a simplified model, useful for elementary instruction and for short run decisions. Cost volume profit (CVP) analysis expands the use of information provided by… …   Wikipedia

### Share the article and excerpts

##### Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.