What is COGS?

COGS stands for Cost of goods sold.

It is the amount of money spent by a company on its labor, materials, and overheads to manufacture/purchase products of the goods that are sold to customers during the year.

For a Manufacturing unit:

The Cost of goods sold = Total cost of production + Opening stock of the Finished goods – Closing stock of the finished goods.

For a retailer/reseller:

The Cost of Goods Sold = Opening Stock + Purchase – Closing Stock

COGS is an important part of a Cost Sheet.

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