It includes all manufacturing costs such as direct materials, direct labor and manufacturing overheads (both fixed and variable). cost which is not incurred during the manufacturing process. It is an important determinant of a company’s ultimate gross profit margin.Ĭost of goods sold does not include any period cost i.e. It is the amount that is reported on the income statement as a subtraction from net sales revenue for the period to arrive at the gross profit for the period. Cost of goods sold represents the product costs of units sold during a particular period.
