Costs of goods sold
Costs of goods sold / Herstellkosten/Herstellungskosten
Costs of goods sold (or costs of sales) show the total product or service costs when all function costs that are involved in the production of the finished product are included. These are principally:
- the direct material costs and the proportional manufacturing costs – their sum is also known as the product costs,
- the material overheads, the structure costs of purchasing and warehousing,
- the manufacturing structure costs, the structure costs of production planning and control, of construction and development (if not directly attributable to the specific order) and the costs of administration.
The term Costs of Goods Sold generally means the full Costs of Goods Sold, i.e. the costs of all functions involved in the output of goods or services. These are required for the drawing up of the profit & loss statement based on full costs and eventually for the drawing up of the balance sheet (inventory evaluation). The proportional costs of goods sold, or simply product costs are required for the calculation of the contribution margin I.
The term „Herstellungskosten“ is a concept from the German Commercial Code (HGB § 255, para. 2).