what is included in the cost of goods sold cogs 
cost of goods sold cogs is the cost of acquiring or manufacturing the products or finished goods that a company then sells during a period so the only costs included in the measure are those that are directly tied to the production of the products including the cost of labor materials and manufacturing overhead 2for example cogs for an automaker would include the material costs for the parts that go into making the car plus the labor costs used to put the car together the cost of sending the cars to dealerships and the cost of the labor used to sell the car would be excluded furthermore costs incurred on the cars that were not sold during the year will not be included when calculating cogs whether the costs are direct or indirect in other words cogs includes the direct cost of producing goods or services that were purchased by customers during the year as a rule of thumb if you want to know if an expense falls under cogs ask would this expense have been an expense even if no sales were generated cogs only applies to those costs directly related to producing goods intended for sale 1