TaxTMI 
TaxTMI 
Dear experts,
I have some confusion please justify the concept of COGS....
Regard:-
Virkam singh
consept of COGS
18 Sep 2014 
1 Reply 
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Cost of goods sold affects gross margin and varies with inventory system and costing method, altering reported profit.
Cost of goods sold (COGS) is the aggregate of direct labor, materials, and overhead incurred to produce goods or services sold and is subtracted from revenue to obtain gross margin. Under a periodic system COGS = beginning inventory + purchases - ending inventory (also reflecting scrap, obsolescence, theft); under a perpetual system COGS is recorded continuously and, with cycle counting, tends to be more accurate. Inventory costing methods (FIFO versus LIFO) affect the cost charged to COGS, and COGS may be misstated by manipulating bills of materials, counts, cutoffs, or overhead allocations. (AI Summary)
Cost of goods sold (COGS) is the aggregate of direct labor, materials, and overhead incurred to produce goods or services sold and is subtracted from revenue to obtain gross margin. Under a periodic system COGS = beginning inventory + purchases - ending inventory (also reflecting scrap, obsolescence, theft); under a perpetual system COGS is recorded continuously and, with cycle counting, tends to be more accurate. Inventory costing methods (FIFO versus LIFO) affect the cost charged to COGS, and COGS may be misstated by manipulating bills of materials, counts, cutoffs, or overhead allocations. (AI Summary)