Reading the accounts
Cost of goods sold
Also called COGS or Cost of sales
The direct costs of producing the goods or services a company sold.
How it works
It includes materials, direct labour and the manufacturing or delivery costs tied to each unit sold. It excludes overheads like research, marketing and administration.
For a software business it is mostly hosting and support; for a manufacturer it is the factory.
Related terms
Mentioned in
More in Reading the accounts
- Deferred revenue
- Cash flow statement
- Depreciation and amortisation
- Cash conversion cycle
- DuPont analysis
- Cash burn
- EBITDA
- Capital expenditure
All 51 Reading the accounts terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.