COGS (Cost Of Goods Sold) is an expense reported on the income statement that reflects the cost of obtaining raw materials, direct labor costs, and overhead associated with producing goods. It is typically viewed as the total costs directly attributable to producing a product or service sold by a company during an accounting period. It’s important to note that COGS does not include indirect expenses like distribution costs, sales force costs, marketing expenses, and other operating expenses. By tracking COGS and other business metrics over time, owners can gain insights into the efficiency of their operations and make better informed strategic decisions going forward.