Question

What is typically included in COGS (Cost of Goods Sold)?

A) Advertising expenses
B) Raw materials cost
C) Employee salaries
D) Equipment depreciation

Answer 1

Option B (Raw materials cost) and option D (Equipment depreciation) are typically included in COGS.

Step-by-step explanation:

The typical components included in the Cost of Goods Sold (COGS) are:

1. Raw materials cost: This includes the cost of materials used in the production process. For example, if a company manufactures shoes, the cost of leather, rubber, and other materials used in making the shoes would be part of the COGS.
2. Employee salaries: The salaries and wages paid to employees directly involved in the production process are included in the COGS. This can include workers on the assembly line or in the manufacturing department.
3. Equipment depreciation: The portion of the equipment's value that is used up during the production process is included in the COGS. This recognizes the wear and tear on the equipment over time.

Option B (Raw materials cost) and option D (Equipment depreciation) are typically included in COGS.