Cost Of Goods Sold (COGS)

Cost of goods sold (COGS) is the amount a company spends to obtain or make the products it sells. For a retailer, that is often the purchase price from a supplier. For a manufacturer, it usually includes raw materials, production labor, and other direct production costs.

COGS appears on the income statement and is subtracted from sales to find gross profit. For many companies, it is the largest expense.