Definition
The direct costs of producing goods or services that were actually sold, abbreviated as COGS. It includes materials and labor but not the CEO's golf club membership, no matter how insistently he argues it's 'client development.'
Example Usage
The restaurant's COGS was 35% of revenue, which would be sustainable if they stopped letting the chef experiment with truffle foam.
Origin
Fundamental accounting concept formalized in manufacturing accounting during the Industrial Revolution.
Fun Fact
Service companies debate whether they even have COGS or just operating expenses, leading to surprisingly heated arguments among accountants.
Source: Income statement terminology
Related Terms
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See “cost of goods sold” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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