ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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. As revenue increases, more resources are required to produce the goods or service.

Detailed explanation-2: -COGS includes direct labor, direct materials or raw materials, and overhead costs for the production facility. Cost of goods sold is typically listed as a separate line item on the income statement. Operating expenses are the remaining costs that are not included in COGS. Operating expenses can include: Rent.

Detailed explanation-3: -Operating expenses-also known as selling, general and administrative expenses (SG&A)-are the costs of doing business. They include rent and utilities, marketing and advertising, sales and accounting, management and administrative salaries.

Detailed explanation-4: -Cost of goods sold refers to expenses directly related to the production of a product, such as the materials needed to assemble a product and the transportation needed to bring goods from a distributor to a retailer. Both types of expenses are recorded as separate line items on a company’s income statement.

Detailed explanation-5: -expenses. The cost of providing goods and services to customers is referred to as expenses. The amount earned by selling goods and services is called revenue.