A certified public accountant is one who has earned a license in his or her state that attests to a high degree of skill, training, and experience. In addition to passing an accounting examination, a candidate must have the proper business experience, education, and moral character in order to qualify for the license. The letters CPA are commonly used and generally recognized to be the abbreviation for the title Certified Public Accountant.
For manufactured goods, direct costs also include raw materials, labor, and production expenses. Other costs, such as transportation and advertising, are not included in COGS. To calculate COGS, beginning inventory is added to current period purchases, and ending inventory is then deducted.
As the cost of sales excludes overheads, it has a higher proportion of variable costs than the operating costs as a whole. It may contain some fixed costs such as labour costs. Nonetheless, in many cases the cost of goods sold does consist almost entirely of variable costs.