What Is Cost of Goods? What Does Cost of Goods Tell Us?
The cost of goods or cost of goods sold (COGS) is the cost it took the company to create or provide the products or goods sold. This is subtracted from revenue or total sales to calculate gross profit.
For example, if you sold 10 widgets for $10 each, but each widget cost you $6 to make, you had $100 in revenue ($10 x 10 widgets = $100), $60 in COGS ($6 x 10 widgets = $60), and $40 in gross profit ($100 - $60 = $40).
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Published: 6/03/2021
