Cost of Goods Sold (COGS) represents the purchase price of inventory. Companies usually use one of three methods to determine this cost. These are FIFO, LIFO, and average cost.
COGS is expense account and all expenses has debit balance as default normal balance so COGS also has debit balance.
sales commission
Sundry expenses are the expenses of small amount and it is not possible to maintain there detail
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.
payroll, sales commissions, employee benefits and pension contributions, transportation and travel, amortization and depreciation, rent, repairs, and taxes are included in an expenses.
COGS is expense account and all expenses has debit balance as default normal balance so COGS also has debit balance.
Research and development costs are typically considered an operating expense and are included in SG&A (Selling, General, and Administrative) expenses rather than cost of goods sold (COGS). This is because R&D expenses are incurred to create future benefits, such as new products or improved processes, rather than to directly produce goods for sale.
sales commission
Abnormal spolage is part of overhead expenses, as it is viewed as a cost of running the operation, rather than a direct cost. Note that normal spoilage (uncontrolable) is part of COGS
Sundry expenses are the expenses of small amount and it is not possible to maintain there detail
Operating expenses.
Assuming we are talking about a business, one way is to reduce operating expenses in conjunction with changing the accounting method for cost of goods sold (COGS). Many companies use the FIFO method for calculating COGS. The FIFO method uses the highest costs for the goods and higher COGS leads to lower net income. Switching to the LIFO inventory method reduces COGS and increases net income.
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.
payroll, sales commissions, employee benefits and pension contributions, transportation and travel, amortization and depreciation, rent, repairs, and taxes are included in an expenses.
what are cogs made out of
yep.
No advertisement expenses are not included in selling price because selling expenses are not part of product cost rather these are period cost.