Any business supplies not used directly for manufacturing a product are not included in COGS.Ĭost of Goods Sold = Beginning Inventory + Purchases – Ending Inventory
Examples of what can be listed as COGS include the cost of materials, labor, the wholesale price of goods that are resold, such as in grocery stores, overhead, and storage.
It does not include selling, administrative or other expenses associated with making a product, which are considered incurred expenses. Related: What is Average Unit Retail (AUR) and Why Does it Matter? What is Cost of Goods Sold (COGS)?īasically, COGS represents the direct and indirect expenses to make a product, which typically includes:
How is COGS calculated for Amazon sellers?.
Let’s take a look at what the terms means, why it is important, how to calculate Cost of Goods Sold, and some common use cases that can help you scale your business: What does COGS mean to Amazon sellers and why is it so important? Cost of Goods Sold (COGS) is a Generally Accepted Accounting Principle (GAAP ), considered one of the most important tools to assess business profitability.
