Cost of Goods Sold (COGS)

The Cost of Goods Sold (or cost of sales) is the total of all costs incurred directly or indirectly in relation to the sale of a product. Deducting cost of goods sold from top-line revenues yields a company’s gross profit. Cost of goods sold includes raw materials, transportation costs relating to purchase of raw materials, labour costs, storage costs of raw materials or semi-finished goods, and other overheads relating to production.