Cost of Goods Sold Law and Legal Definition
Cost of goods sold is an accounting term that refers to the direct expenses related to creating and producing a product. The following are the types of expenses that are considered "Cost of goods sold":
1. The cost of product or raw materials, including the cost of having them shipped to manufacturer/buyer.
2. The cost of storing the products sold by the manufacturer.
3. Direct labor costs (including contributions to pensions or annuity plans) for workers who produce the products.
4. Factory overhead expenses.