COGS

The direct costs of producing or purchasing the products you sold during a specific period, materials, manufacturing, and direct labour.

COGS is the foundation of profit calculation. Misunderstanding what's included leads to thinking you're more profitable than you are.

You sell 100 phone cases at £20 each (£2,000 revenue). Each case cost you £4 from the supplier. COGS = £400. Gross profit = £1,600.