Cost of goods sold (COGS) is an accounting term for the direct costs of products or services such as materials, labor, carrying costs and transportation. This appears on the income statement of an organization and is used to calculate gross margin. Only the costs of goods that were actually sold to a customer are reported on the income statement, together with the associated revenue from those sales.
COGS vs Cost of RevenueCOGS is essentially the same concept as Cost of Revenue. The latter is a more modern term that sprang out of the service industry. The term COGS is an older term that is associated with manufacturing. In many cases, businesses that sell services can directly relate marketing and selling costs to their unit sales. In manufacturing, these costs are traditionally seen as overhead.
Direct costs of products and services that have been sold in a given financial period.
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