The Cost of Goods Sold Calculation Formula (COGS) is a business term that simply means the amount your company has spent on producing and selling goods during a given period of time. The formula takes into account the cost of materials, labor, overhead, and other related expenses in order to determine how much it costs for you to produce and sell those goods. This information is essential for businesses to understand their overall profitability, as well as their pricing structure, since it includes all of the costs involved in bringing a product or service to market. By understanding their COGS calculation formula, businesses can make informed decisions about where to invest additional resources to increase their margins.