What is Cost of Goods Sold?
A definition of Cost of Goods Sold
“Cost of Goods Sold (COGS) is the total expense incurred by a company to produce and sell its products. It includes costs of materials, labor, and manufacturing overhead.”

Business Glossary > What is Cost of Goods Sold?
Examples of Cost of Goods Sold in a Sentence:
The cost of goods sold increased due to rising material prices.
A lower cost of goods sold can increase a company’s profit margins.
Companies calculate cost of goods sold to determine their gross profit.
Why is Cost of Goods Sold Important in Business?
Understanding Cost of Goods Sold is critical for businesses as it directly affects profit margins and pricing strategies. Businesses must manage COGS effectively to remain competitive and profitable.
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Associated Terms
Here are some associated business terms and synonyms for “Cost of Goods Sold”:
- COGS
- Cost of Sales
- Direct Costs
Apple Cost of Goods Sold
Apple closely manages its cost of goods sold to maintain high profit margins on its products. The company benefits from economies of scale, allowing it to control costs while delivering innovative products.
Final Notes on Cost of Goods Sold
When analyzing COGS, businesses should consider:
- Efficiency in production processes
- Impact of fixed and variable costs
- Opportunities for cost reduction
Effective management of COGS contributes to overall financial health and business sustainability.
This has been a definition of Cost of Goods Sold meaning.
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