Cost of goods sold is the total expense of buying or producing the company's goods or services.

Question

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Cost of goods sold (COGS) represents the direct expenses incurred in producing or purchasing the goods or services that a company sells. It includes the cost of raw materials, direct labor, and manufacturing overhead, but excludes indirect expenses such as marketing and administrative costs. Therefore, COGS is the total cost of goods sold during a specific period, which is deducted from the revenue to calculate the gross profit margin.

Cost of Goods Sold Is the Total Expense of Buying