The direct costs attributable to the production of the 
goods sold by a company. This amount includes the cost of 
the materials used in creating the good along with the 
direct labor costs used to produce the good. It excludes 
indirect expenses such as distribution costs and sales 
force costs. COGS appears on the income statement and can 
be deducted from revenue to calculate a company's gross 
margin.

Also referred to as "cost of sales". 

Price of buying or making an item that is sold; also called 
cost of goods sold. The difference between sales and cost 
of sales is gross profit. For a retail business, the cost 
of sale is the purchase price of the item. For a 
manufactured good, the cost of sale includes Direct 
Material, Direct Labor, and Factory Overhead associated 
with producing it. An example would be the cost to General 
Motors of making a car. An illustrative example of a gross 
profit calculation for a retail business follows:

Cost of Good Sold = (Opening Stock + Purchases + Direct 
Expenses) - (Closing Stock + Direct Incomes)

Where the cost of expenditure incurred for the production 
of product from the stage of conversion of raw material to 
finished product. where cost of goods can be state as :
COGS=Opening stock+purchases+manufacturing expenses/direct 
expenses-Closing stock

Cost of goods sold is usually the largest expense on the 
income statement of a company selling products or goods. 
Cost of Goods Sold is a general ledger account under the 
perpetual inventory system. 

Under the periodic inventory system there will not be an 
account entitled Cost of Goods Sold. Instead, the cost of 
goods sold is computed as follows: cost of beginning 
inventory + cost of goods purchased (net of any returns or 
allowances) + freight-in - cost of ending inventory. 

This account or this calculation matches the cost of the 
goods sold with the sales.

cost of good sold means in simple terms all expenses or 
cost attributed to a particular product.Cost of good sold 
includes direct cost,over head exp. & all selling and 
administrative exp. if percentage of profit is added in to 
it .Then it becomes the selling price.