ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Cost of goods sold is the major expense in merchandising companies and represents what the seller paid for the inventory it has sold. Gross margin or gross profit is the net sales – cost of goods sold and represents the amount we charge customers above what we paid for the items.

Detailed explanation-2: -Cost of goods sold (COGS) definition It appears on an income statement and typically includes money spent on raw materials and labour. It does not include costs associated with marketing, sales or distribution. Cost of goods sold (COGS) is the direct cost of making a company’s products.

Detailed explanation-3: -The cost of goods sold (COGS) is the total cost of inventory that has been sold by a company. This figure is calculated by adding together the variable cost of materials, labor, and overhead associated with each unit of inventory sold.

Detailed explanation-4: -COGS is often the second line item appearing on the income statement, coming right after sales revenue. COGS is deducted from revenue to find gross profit. Cost of goods sold consists of all the costs associated with producing the goods or providing the services offered by the company.

Detailed explanation-5: -Merchandising companies sell products but do not make them. Therefore, these companies will have cost of goods sold but the calculation is much easier than for a manufacturing company.