Cost of Sales is a financial and accounting term that refers to the direct costs associated with producing, processing or acquiring goods that are sold. This includes items such as raw materials, components and labor costs. It is also known as Cost of Goods Sold (COGS). Cost of Sales is used to measure how successful a company is in terms of its cost efficiency and overall profitability. By tracking the amount of money spent on producing or purchasing goods compared to what they ultimately sell them for, companies can make better informed decisions about their pricing strategies and product mix. Additionally, analyzing your Cost of Sales over time helps you identify potential improvement opportunities within your supply chain and production processes. In short, Cost of Sales keeps business decision-makers informed and empowers them to make smarter choices for their business in the long run.