Cost of Goods Sold (COGS) is an accounting term that refers to the direct costs attributed to the production of goods or services. These costs may include materials, labor, transportation, and other expenses related to the production process. By tracking COGS over a certain period, businesses can determine how much it cost them to produce their product and compare this cost to their total revenue in order to understand their profit margins. COGS is also known as “Cost of Sales” and is an important metric for measuring financial performance.