• Cost of goods sold (COGS) includes all costs and expenses directly related to the production of goods.

  • COGS does not include indirect costs such as overhead, sales and marketing.
  • The cost price is subtracted from revenues (sales) to calculate gross profit and gross margin. The higher the cost, the lower the margin.
  • The value of COGS will change depending on the accounting standards used in the calculation.
  • COGS differs from operating expenses (OPEX) in that OPEX includes expenses that are not directly related to the production of goods or services.