ECONOMICS
ECONOMIC SYSTEMS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Cost of Goods
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Profit
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Expenses
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Income
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Detailed explanation-1: -Cost of goods sold is the total amount your business paid as a cost directly related to the sale of products. Depending on your business, that may include products purchased for resale, raw materials, packaging, and direct labor related to producing or selling the good.
Detailed explanation-2: -Raw materials are categorized as direct expenses on a company’s income statement because they contribute directly to the making of a product or delivery of a service. As raw material costs change along with production volumes, they are considered to be variable costs.
Detailed explanation-3: -The manufacturing company purchases the raw materials, manufactures the goods, and sells finished products to wholesalers, retailers, or eCommerce businesses that order the goods.
Detailed explanation-4: -Cost of Goods Sold (COGS) measures the “direct cost” incurred in the production of any goods or services. It includes material cost, direct labor cost, and direct factory overheads, and is directly proportional to revenue.