{"id":1087,"date":"2019-07-01T15:08:10","date_gmt":"2019-07-01T15:08:10","guid":{"rendered":"https:\/\/sage-new-clone.local\/en-au\/blog\/?post_type=sage_glossary&#038;p=1087"},"modified":"2025-10-10T14:04:20","modified_gmt":"2025-10-10T06:04:20","slug":"cost-goods-sold-cogs","status":"publish","type":"sage_glossary","link":"https:\/\/www.sage.com\/en-my\/blog\/glossary\/cost-goods-sold-cogs\/","title":{"rendered":"What is Cost of Goods Sold (COGS)?"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-my\/blog\/glossary\/\" class=\"entry-header__link\">Glossary definition<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tWhat is Cost of Goods Sold (COGS)?\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"What is Cost of Goods Sold (COGS)?\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-my\/blog\/glossary\/cost-goods-sold-cogs\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-cost-of-goods-sold-cogs\">Cost of Goods Sold (COGS)<\/h2>\n\n\n\n<p>The cost of goods sold, or COGS, refers to the direct costs that contribute to the creation of the goods or products a company sells. Direct costs include the financial means it takes to manufacture the product, namely raw material and labor costs. The COGS definition is simply the combination of costs required to produce a good. Indirect costs such as distribution are excluded from the cost of goods sold.<\/p>\n\n\n\n<p><strong>The basic COGS formula:<\/strong><\/p>\n\n\n\n<p>Cost of Goods Sold = (Initial Inventory + Additional Costs) \u2013 Ending Inventory<\/p>\n\n\n\n<p>To calculate COGS, take the cost of initial inventory and add additional material and labor costs. From that, subtract the value of the inventory to be sold.<\/p>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to the Sage Advice Newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Get a roundup of our best business advice in your inbox every month<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-9bb1029b-6379-408c-b78c-6f45c352c6f3\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-my\/blog\/wp-content\/uploads\/sites\/25\/2022\/04\/GettyImages-1178687924-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-my\/blog\/wp-content\/uploads\/sites\/25\/2022\/04\/GettyImages-1178687924-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Cost of Goods Sold (COGS) The cost of goods sold, or COGS, refers to the direct costs that contribute to the creation of the goods or products a company sells. Direct costs include the financial means it takes to manufacture the product, namely raw material and labor costs. The COGS definition is simply the combination [&hellip;]<\/p>\n","protected":false},"author":708,"featured_media":0,"template":"","meta":{"_sage_video":false,"footnotes":""},"tags":[37,179,55,70,72],"class_list":["post-1087","sage_glossary","type-sage_glossary","status-publish","hentry","tag-accounting","tag-cash-flow","tag-expenses","tag-profit-and-loss","tag-revenue"],"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice Malaysia","distributor_original_site_url":"https:\/\/www.sage.com\/en-my\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-my\/blog\/api\/wp\/v2\/sage_glossary\/1087","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-my\/blog\/api\/wp\/v2\/sage_glossary"}],"about":[{"href":"https:\/\/www.sage.com\/en-my\/blog\/api\/wp\/v2\/types\/sage_glossary"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-my\/blog\/api\/wp\/v2\/users\/708"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-my\/blog\/api\/wp\/v2\/sage_glossary\/1087\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-my\/blog\/api\/wp\/v2\/media?parent=1087"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-my\/blog\/api\/wp\/v2\/tags?post=1087"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}