USA Meaning of Cost of Goods Sold


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The term for cost of goods sold is meant to explain the process of how much it costs produce your products or services. Some examples of COGS would be things such as wood, paint, and labor that are used to make cabinets a company sells. The correct way to find cost of goods sold is by adding the cost of raw materials with direct labor
 
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To put it simply, Cost of Goods Sold is exactly what it sounds like. It is the combined direct costs accumulated and used to create any product that is sold, like an expense. When you sell a product and earn revenue, you must subtract the Cost of Goods Sold to determine your gross margin. If COGS per item is higher than the price a product sells for, every product would be sold at a loss.
- KF 2302
 

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