Читать книгу Financial Accounting For Dummies - Maire Loughran - Страница 49

The cost of goods sold (COGS) reflects all costs directly tied to any product a company makes or sells, whether the company is a merchandiser or a manufacturing company.

If a company is a merchandiser (it buys products from a manufacturer and sells them to the general public), the COGS is figured by calculating how much it cost to buy the items the company holds for resale. Keep in mind that to accurately calculate this amount, you have to understand how to value ending inventory, which is the inventory remaining on the retails shop’s shelves at the end of the financial period, a topic I discuss in Chapter 13.

Because a manufacturer makes products, its COGS consists of raw material costs plus the labor costs directly related to making any products that the manufacturer offers for sale to the merchandiser. COGS also includes factory overhead, which consists of all other costs incurred while making the products.

A service company, such as a physician or attorney, will not have a COGS because it does not sell a tangible product.