Cost of Goods Sold (COGS) refers to the direct costs associated with the production of goods that a company sells during a specific period. This includes the costs of materials and labor directly tied to product creation but excludes indirect expenses like distribution or sales force costs. Understanding COGS is crucial for determining gross profit, analyzing cost structure, and conducting breakeven analysis as it impacts pricing strategies and overall financial health.
congrats on reading the definition of Cost of Goods Sold (COGS). now let's actually learn it.