What Is Cost of Goods Sold (COGS)?
The direct costs attributable to producing goods or delivering services that were sold.
Detailed Explanation
COGS includes materials, direct labor, and manufacturing overhead. Subtracting COGS from revenue yields gross profit.
Example
A print shop's COGS includes paper, ink, and press operator wages billed on each production invoice.
Why It Matters
Accurate COGS tracking is essential for pricing, margin analysis, and tax reporting.
Related Resources
Related Accounting Basics Terms
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