Cost of sales definition - Cost of sales (also known as cost of goods sold) refers to the cost required to manufacture or purchase a product that is then sold to a customer.
Essentially, the cost of sales refers to what the seller has to pay in order to create the product and get it into the hands of a paying customer.
Many companies that sell goods use cost of sales to accurately calculate their gross margin. The money spent to initially create or purchase the product is compared against the money earned at the final transaction. The difference is the gross margin.
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