(v1040.00) Cost of Goods Sold

Also called Cost of Sales, refers to the expensed cost of units sold. It is generally determined as follows:

  Beginning Inventory
+ Cost of Goods Purchased or Manufactured
- Ending Inventory
= Cost of Goods Sold

Cost of Goods Sold (v1040.0) may contain direct and indirect costs. Examples of direct costs include raw materials, assembly components, and the labor costs directly associated with the manufacture of the products to be sold. Examples of indirect costs are the overhead expenses (utilities, taxes, and depreciation) associated with production and manufacturing.