Entity: COST-OF-GOODS-SOLD
Cost of Goods Sold (COGS) refers to the total cost of acquiring or manufacturing products that a company sells during a specific period. It includes direct costs like materials, labor, and overhead expenses.
Cost of Goods Sold
Etymology
The term 'Cost of Goods Sold' is commonly abbreviated as COGS.
Definition
Cost of Goods Sold (COGS) is the total of all costs used to create a product that has been sold. These costs include direct labor, materials, and overhead.
Historical Context
The concept of Cost of Goods Sold has been a fundamental aspect of accounting practices for businesses, allowing them to accurately determine the profitability of their operations.
Cultural Significance
Understanding and effectively managing the Cost of Goods Sold is crucial for businesses to optimize their pricing strategies, maintain profitability, and make informed financial decisions.
Related Concepts
- Gross Profit
- Inventory Management
- Cost Accounting
See Also
The Cost of Goods Sold (COGS) is the sum of all expenses incurred in creating a product that has been sold, encompassing direct labor, materials, and overhead costs.