Calculating the Cost of Goods Sold (COGS) is an essential part of business accounting. It refers to the total cost incurred in producing a product or delivering a service. This includes direct costs such as raw materials, wages paid to employees, and production overheads, plus any other indirect costs related to running the business. Knowing your COGS can help you understand how much profit you can make on each sale, and gives you a clearer picture of your overall financial health. It’s important for all businesses, large or small, to track their expenses closely in order to stay competitive – and calculating COGS helps you do just that!