Cost of Goods Sold (COGS) is an accounting term used to describe the expenses associated with producing and selling a company’s goods. This includes all direct costs associated with creating the product or service, including materials, labor, shipping, and other related manufacturing expenses. Gross profit is the amount of money left over after subtracting COGS from total sales revenue. Gross profit can be used to cover overhead costs, fund expansion projects, and create cash reserves for unexpected needs or investments. Put simply – the higher your gross profit margin, the more successful your business is!