<p>The cost of sales is the accumulated total of all costs used to create a product or service, which has been sold. The cost of sales is a key part of the performance metrics of a company, since it measures the ability of an entity to design, source, and manufacture goods at a reasonable cost.</p>
Small Business Accountants
What are Cost of Sales?
Cost of sales, also called cost of goods sold (COGS), covers the direct costs of producing or acquiring the goods or services a UK business sells. Typical items include raw materials, direct labour, freight-in, and any direct overheads. The calculation is opening stock plus purchases during the period, less closing stock. Cost of sales is deducted from revenue to show gross profit on the profit and loss statement.
