Cost of goods sold:
A) Is another term for merchandise sales.
B) Is the cost of merchandise sold to customers.
C) Is another term for revenue.
D) Is also called gross margin.
E) Is a term only used by service firms.

Question

Quizplus · Accepted Answer

Cost of goods sold refers to the direct costs incurred in producing goods that have been sold during a given period. It includes the cost of the materials used in creating the product, direct labor costs associated with making the product, and overhead expenses directly related to the production facility or process. It is not the same as merchandise sales, revenue, or gross margin, which are all measures of income or profit. Cost of goods sold is not exclusive to manufacturing or retail businesses and can be used by service firms that have a direct cost associated with delivering their services.

Cost of Goods Sold