Cost of goods sold (COGS) is the direct costs associated with producing or purchasing the goods that a company sells during a specific period of time. This includes the cost of raw materials, labor, and overhead expenses directly related to the production of the goods. COGS is an important metric in calculating a company's gross profit and is subtracted from revenue to determine gross profit margin. It is typically included in a company's income statement and is used to assess the efficiency and profitability of the company's operations.
