0
COGS in the service industry will be the cost of the persons or machines directly applying the service. The accounts affected will most likely be salaries and depreciation. Other items like electricity to run the machines and helpers to the main human service providers will usually be classified as operating expenses (because the are indirect or overhead) which is after COGS is calculated on the income statement to arrive at the net profit.
For my service company, my contractors are my COGS while my three employees are classified as just payroll expenses AFTER the gross income.
You really have to decipher your direct and indirect costs to achieve a sale to determine which were the COGS that actually provided the service and which are just the operating expenses for the whole good of the company.
Wiki User
∙ 10y ago
Add your answer:
Earn +20 pts
How do you calculate sales revenue knowing margin and cost of goods?
IF cost of goods is available and margin is also provided then sales can be calculated as follows: Sales = Cost of goods / margin of sales
Role of a cost accountant in service industry?
business accounting
The inventory turnover ratio is calculated by dividing cost of goods sold by?
ending inventory
What is the difference between cost of sales and cost of goods sold?
There is no difference between the cost of goods sold and cost of sales. Both are same.What if Cost of Sales relates to a service rather than a "good"? Does that not signify a difference? For example a cost of sales for a service would contain no starting and finishing inventory component as is described in some texts as a way of calculating cost of goods sold.
How is a gross margin calculated?
the excess of the net sales revenue over the cost of goods sold.
How do you calculate sales revenue knowing margin and cost of goods?
IF cost of goods is available and margin is also provided then sales can be calculated as follows: Sales = Cost of goods / margin of sales
Why did the cottage industry disappear?
manufactured goods cost less to make than handmade goods
In soviet union what was the opportunity cost of the emphasis on heavy industry?
The opportunity cost were the consumer goods and services.
In the soviet union was the opportunity cost of the emphasis on heavy industry?
The opportunity cost were the consumer goods and services.
Role of a cost accountant in service industry?
business accounting
The inventory turnover ratio is calculated by dividing cost of goods sold by?
ending inventory
Is 79 percent good for cost of goods sold?
It depends always in which industry company is working and what is that industries standards as these figures varies from industry to industry.
What is the difference between cost of sales and cost of goods sold?
There is no difference between the cost of goods sold and cost of sales. Both are same.What if Cost of Sales relates to a service rather than a "good"? Does that not signify a difference? For example a cost of sales for a service would contain no starting and finishing inventory component as is described in some texts as a way of calculating cost of goods sold.
How is a gross margin calculated?
the excess of the net sales revenue over the cost of goods sold.
The inventory turnover is calculated by dividing cost of goods sold by?
ending inventory
What is the difference between economic and free goods?
The difference between free and economic goods is the fact that, free goods don't cost us anything to be able to have and economic goods cost us to be able to get that service or good.
What is the prime cost in service industry?
In services industries there is no raw material so only direct labor is part of prime cost in services industry.
