Cost of Goods Sold (COGS)

Cost of Goods Sold (COGS)

The variable (or direct) costs of products sold and shipped to customers. Typically includes raw materials and labor, and other components on a company-by-company basis. Individual components might include sales commission and depreciation.

COGS is a variable cost because the cost reported varies with sales volume. Conceptually, Direct Costs, Cost of Goods Sold and Variable Cost are very similar. Check how each term is used in your company.

Also called Cost of Sales (COS).

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