What Is Included in Cost of Goods Sold? Definition & Examples
The cost of goods sold (COGS) includes key production-related expenses such as materials, labor, and factory costs. COGS does not include office expenses, utilities, or marketing costs. Calculating COGS helps businesses analyze financial performance and adjust pricing strategies. Understanding what is included in the cost of goods sold is crucial for accurate tax reporting and cost control. Companies must monitor COGS regularly to optimize profitability. By identifying unnecessary expenses, businesses can reduce COGS and increase revenue. Learn the best practices for managing COGS and improving financial efficiency.